Correlation Between Westinghouse Air and Reinsurance Group
Can any of the company-specific risk be diversified away by investing in both Westinghouse Air and Reinsurance Group 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 Reinsurance Group 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 Reinsurance Group of, you can compare the effects of market volatilities on Westinghouse Air and Reinsurance Group 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 Reinsurance Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westinghouse Air and Reinsurance Group.
Diversification Opportunities for Westinghouse Air and Reinsurance Group
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Westinghouse and Reinsurance is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Westinghouse Air Brake and Reinsurance Group of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reinsurance Group 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 Reinsurance Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reinsurance Group has no effect on the direction of Westinghouse Air i.e., Westinghouse Air and Reinsurance Group go up and down completely randomly.
Pair Corralation between Westinghouse Air and Reinsurance Group
Assuming the 90 days horizon Westinghouse Air Brake is expected to generate 0.83 times more return on investment than Reinsurance Group. However, Westinghouse Air Brake is 1.2 times less risky than Reinsurance Group. It trades about 0.25 of its potential returns per unit of risk. Reinsurance Group of is currently generating about 0.17 per unit of risk. If you would invest 18,650 in Westinghouse Air Brake on November 7, 2024 and sell it today you would earn a total of 1,245 from holding Westinghouse Air Brake or generate 6.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 91.3% |
| Values | Daily Returns |
Westinghouse Air Brake vs. Reinsurance Group of
Performance |
| Timeline |
| Westinghouse Air Brake |
| Reinsurance Group |
Westinghouse Air and Reinsurance Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westinghouse Air and Reinsurance Group
The main advantage of trading using opposite Westinghouse Air and Reinsurance Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westinghouse Air position performs unexpectedly, Reinsurance Group 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 Reinsurance Group will offset losses from the drop in Reinsurance Group's long position.| Westinghouse Air vs. CyberArk Software | Westinghouse Air vs. Magic Software Enterprises | Westinghouse Air vs. Alfa Financial Software | Westinghouse Air vs. CHIBA BANK |
| Reinsurance Group vs. USWE SPORTS AB | Reinsurance Group vs. JD SPORTS FASH | Reinsurance Group vs. NEWELL RUBBERMAID | Reinsurance Group vs. Materialise NV |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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