Correlation Between Westinghouse Air and Mohawk Industries
Can any of the company-specific risk be diversified away by investing in both Westinghouse Air and Mohawk Industries 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 Mohawk Industries 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 Mohawk Industries, you can compare the effects of market volatilities on Westinghouse Air and Mohawk Industries 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 Mohawk Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westinghouse Air and Mohawk Industries.
Diversification Opportunities for Westinghouse Air and Mohawk Industries
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Westinghouse and Mohawk is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Westinghouse Air Brake and Mohawk Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mohawk Industries 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 Mohawk Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mohawk Industries has no effect on the direction of Westinghouse Air i.e., Westinghouse Air and Mohawk Industries go up and down completely randomly.
Pair Corralation between Westinghouse Air and Mohawk Industries
Assuming the 90 days horizon Westinghouse Air Brake is expected to generate 0.64 times more return on investment than Mohawk Industries. However, Westinghouse Air Brake is 1.56 times less risky than Mohawk Industries. It trades about 0.1 of its potential returns per unit of risk. Mohawk Industries is currently generating about 0.04 per unit of risk. If you would invest 9,273 in Westinghouse Air Brake on September 5, 2024 and sell it today you would earn a total of 9,857 from holding Westinghouse Air Brake or generate 106.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Westinghouse Air Brake vs. Mohawk Industries
Performance |
| Timeline |
| Westinghouse Air Brake |
| Mohawk Industries |
Westinghouse Air and Mohawk Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westinghouse Air and Mohawk Industries
The main advantage of trading using opposite Westinghouse Air and Mohawk Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westinghouse Air position performs unexpectedly, Mohawk Industries 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 Mohawk Industries will offset losses from the drop in Mohawk Industries' long position.| Westinghouse Air vs. Superior Plus Corp | Westinghouse Air vs. NMI Holdings | Westinghouse Air vs. Origin Agritech | Westinghouse Air vs. SIVERS SEMICONDUCTORS AB |
| Mohawk Industries vs. Westinghouse Air Brake | Mohawk Industries vs. SHIP HEALTHCARE HLDGINC | Mohawk Industries vs. SEALED AIR | Mohawk Industries vs. GUARDANT HEALTH CL |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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