Correlation Between Westinghouse Air and EHEALTH
Can any of the company-specific risk be diversified away by investing in both Westinghouse Air and EHEALTH 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 EHEALTH 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 EHEALTH, you can compare the effects of market volatilities on Westinghouse Air and EHEALTH 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 EHEALTH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westinghouse Air and EHEALTH.
Diversification Opportunities for Westinghouse Air and EHEALTH
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Westinghouse and EHEALTH is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Westinghouse Air Brake and EHEALTH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EHEALTH 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 EHEALTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EHEALTH has no effect on the direction of Westinghouse Air i.e., Westinghouse Air and EHEALTH go up and down completely randomly.
Pair Corralation between Westinghouse Air and EHEALTH
Assuming the 90 days horizon Westinghouse Air Brake is expected to generate 0.35 times more return on investment than EHEALTH. However, Westinghouse Air Brake is 2.87 times less risky than EHEALTH. It trades about 0.13 of its potential returns per unit of risk. EHEALTH is currently generating about 0.02 per unit of risk. If you would invest 15,033 in Westinghouse Air Brake on September 3, 2024 and sell it today you would earn a total of 4,042 from holding Westinghouse Air Brake or generate 26.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westinghouse Air Brake vs. EHEALTH
Performance |
| Timeline |
| Westinghouse Air Brake |
| EHEALTH |
Westinghouse Air and EHEALTH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westinghouse Air and EHEALTH
The main advantage of trading using opposite Westinghouse Air and EHEALTH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westinghouse Air position performs unexpectedly, EHEALTH 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 EHEALTH will offset losses from the drop in EHEALTH's long position.| Westinghouse Air vs. Superior Plus Corp | Westinghouse Air vs. NMI Holdings | Westinghouse Air vs. Origin Agritech | Westinghouse Air vs. SIVERS SEMICONDUCTORS AB |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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