Correlation Between Westinghouse Air and Service Properties
Can any of the company-specific risk be diversified away by investing in both Westinghouse Air and Service Properties 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 Service Properties 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 Service Properties Trust, you can compare the effects of market volatilities on Westinghouse Air and Service Properties 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 Service Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westinghouse Air and Service Properties.
Diversification Opportunities for Westinghouse Air and Service Properties
-0.86 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Westinghouse and Service is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Westinghouse Air Brake and Service Properties Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Service Properties Trust 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 Service Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Service Properties Trust has no effect on the direction of Westinghouse Air i.e., Westinghouse Air and Service Properties go up and down completely randomly.
Pair Corralation between Westinghouse Air and Service Properties
Assuming the 90 days horizon Westinghouse Air is expected to generate 1.77 times less return on investment than Service Properties. But when comparing it to its historical volatility, Westinghouse Air Brake is 3.11 times less risky than Service Properties. It trades about 0.09 of its potential returns per unit of risk. Service Properties Trust is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 258.00 in Service Properties Trust on September 13, 2024 and sell it today you would earn a total of 7.00 from holding Service Properties Trust or generate 2.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westinghouse Air Brake vs. Service Properties Trust
Performance |
| Timeline |
| Westinghouse Air Brake |
| Service Properties Trust |
Westinghouse Air and Service Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westinghouse Air and Service Properties
The main advantage of trading using opposite Westinghouse Air and Service Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westinghouse Air position performs unexpectedly, Service Properties 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 Service Properties will offset losses from the drop in Service Properties' 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 |
| Service Properties vs. Westinghouse Air Brake | Service Properties vs. Fair Isaac Corp | Service Properties vs. Pentair plc | Service Properties vs. Direct Line Insurance |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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