Correlation Between Westinghouse Air and Host Hotels
Can any of the company-specific risk be diversified away by investing in both Westinghouse Air and Host Hotels 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 Host Hotels 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 Host Hotels Resorts, you can compare the effects of market volatilities on Westinghouse Air and Host Hotels 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 Host Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westinghouse Air and Host Hotels.
Diversification Opportunities for Westinghouse Air and Host Hotels
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Westinghouse and Host is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Westinghouse Air Brake and Host Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Host Hotels Resorts 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 Host Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Host Hotels Resorts has no effect on the direction of Westinghouse Air i.e., Westinghouse Air and Host Hotels go up and down completely randomly.
Pair Corralation between Westinghouse Air and Host Hotels
Assuming the 90 days horizon Westinghouse Air Brake is expected to generate 0.83 times more return on investment than Host Hotels. However, Westinghouse Air Brake is 1.21 times less risky than Host Hotels. It trades about 0.29 of its potential returns per unit of risk. Host Hotels Resorts is currently generating about 0.16 per unit of risk. If you would invest 14,864 in Westinghouse Air Brake on September 12, 2024 and sell it today you would earn a total of 4,311 from holding Westinghouse Air Brake or generate 29.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westinghouse Air Brake vs. Host Hotels Resorts
Performance |
| Timeline |
| Westinghouse Air Brake |
| Host Hotels Resorts |
Westinghouse Air and Host Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westinghouse Air and Host Hotels
The main advantage of trading using opposite Westinghouse Air and Host Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westinghouse Air position performs unexpectedly, Host Hotels 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 Host Hotels will offset losses from the drop in Host Hotels' long position.| Westinghouse Air vs. CSX Corporation | Westinghouse Air vs. Superior Plus Corp | Westinghouse Air vs. SIVERS SEMICONDUCTORS AB | Westinghouse Air vs. Norsk Hydro ASA |
| Host Hotels vs. Sunstone Hotel Investors | Host Hotels vs. Xenia Hotels Resorts | Host Hotels vs. Summit Hotel Properties | Host Hotels vs. ASHFORD HOSPITTRUST |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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