Correlation Between Westinghouse Air and Norwegian Air
Can any of the company-specific risk be diversified away by investing in both Westinghouse Air and Norwegian Air 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 Norwegian Air 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 Norwegian Air Shuttle, you can compare the effects of market volatilities on Westinghouse Air and Norwegian Air 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 Norwegian Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westinghouse Air and Norwegian Air.
Diversification Opportunities for Westinghouse Air and Norwegian Air
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Westinghouse and Norwegian is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Westinghouse Air Brake and Norwegian Air Shuttle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Norwegian Air Shuttle 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 Norwegian Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Norwegian Air Shuttle has no effect on the direction of Westinghouse Air i.e., Westinghouse Air and Norwegian Air go up and down completely randomly.
Pair Corralation between Westinghouse Air and Norwegian Air
Assuming the 90 days horizon Westinghouse Air is expected to generate 1.2 times less return on investment than Norwegian Air. But when comparing it to its historical volatility, Westinghouse Air Brake is 1.53 times less risky than Norwegian Air. It trades about 0.2 of its potential returns per unit of risk. Norwegian Air Shuttle is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 85.00 in Norwegian Air Shuttle on August 29, 2024 and sell it today you would earn a total of 8.00 from holding Norwegian Air Shuttle or generate 9.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westinghouse Air Brake vs. Norwegian Air Shuttle
Performance |
| Timeline |
| Westinghouse Air Brake |
| Norwegian Air Shuttle |
Westinghouse Air and Norwegian Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westinghouse Air and Norwegian Air
The main advantage of trading using opposite Westinghouse Air and Norwegian Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westinghouse Air position performs unexpectedly, Norwegian Air 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 Norwegian Air will offset losses from the drop in Norwegian Air's long position.| Westinghouse Air vs. ScanSource | Westinghouse Air vs. Marie Brizard Wine | Westinghouse Air vs. China Resources Beer | Westinghouse Air vs. Chunghwa Telecom Co |
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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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