Correlation Between Westinghouse Air and REVO INSURANCE
Can any of the company-specific risk be diversified away by investing in both Westinghouse Air and REVO INSURANCE at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Westinghouse Air and REVO INSURANCE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westinghouse Air Brake and REVO INSURANCE SPA, you can compare the effects of market volatilities on Westinghouse Air and REVO INSURANCE and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Westinghouse Air with a short position of REVO INSURANCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westinghouse Air and REVO INSURANCE.
Diversification Opportunities for Westinghouse Air and REVO INSURANCE
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Westinghouse and REVO is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Westinghouse Air Brake and REVO INSURANCE SPA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REVO INSURANCE SPA and Westinghouse Air is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Westinghouse Air Brake are associated (or correlated) with REVO INSURANCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REVO INSURANCE SPA has no effect on the direction of Westinghouse Air i.e., Westinghouse Air and REVO INSURANCE go up and down completely randomly.
Pair Corralation between Westinghouse Air and REVO INSURANCE
Assuming the 90 days horizon Westinghouse Air Brake is expected to generate 1.01 times more return on investment than REVO INSURANCE. However, Westinghouse Air is 1.01 times more volatile than REVO INSURANCE SPA. It trades about 0.12 of its potential returns per unit of risk. REVO INSURANCE SPA is currently generating about 0.09 per unit of risk. If you would invest 12,528 in Westinghouse Air Brake on November 3, 2024 and sell it today you would earn a total of 7,212 from holding Westinghouse Air Brake or generate 57.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westinghouse Air Brake vs. REVO INSURANCE SPA
Performance |
| Timeline |
| Westinghouse Air Brake |
| REVO INSURANCE SPA |
Westinghouse Air and REVO INSURANCE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westinghouse Air and REVO INSURANCE
The main advantage of trading using opposite Westinghouse Air and REVO INSURANCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westinghouse Air position performs unexpectedly, REVO INSURANCE can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in REVO INSURANCE will offset losses from the drop in REVO INSURANCE's long position.| Westinghouse Air vs. Cardinal Health | Westinghouse Air vs. MTY Food Group | Westinghouse Air vs. RCI Hospitality Holdings | Westinghouse Air vs. LIFEWAY FOODS |
| REVO INSURANCE vs. Walmart | REVO INSURANCE vs. Xtrackers LevDAX | REVO INSURANCE vs. Lyxor 1 | REVO INSURANCE vs. Xtrackers ShortDAX |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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