Correlation Between Westinghouse Air and ResMed
Can any of the company-specific risk be diversified away by investing in both Westinghouse Air and ResMed 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 ResMed 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 ResMed Inc, you can compare the effects of market volatilities on Westinghouse Air and ResMed 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 ResMed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westinghouse Air and ResMed.
Diversification Opportunities for Westinghouse Air and ResMed
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Westinghouse and ResMed is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Westinghouse Air Brake and ResMed Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ResMed Inc 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 ResMed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ResMed Inc has no effect on the direction of Westinghouse Air i.e., Westinghouse Air and ResMed go up and down completely randomly.
Pair Corralation between Westinghouse Air and ResMed
Assuming the 90 days horizon Westinghouse Air Brake is expected to generate 0.8 times more return on investment than ResMed. However, Westinghouse Air Brake is 1.24 times less risky than ResMed. It trades about -0.13 of its potential returns per unit of risk. ResMed Inc is currently generating about -0.15 per unit of risk. If you would invest 19,030 in Westinghouse Air Brake on September 28, 2024 and sell it today you would lose (580.00) from holding Westinghouse Air Brake or give up 3.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westinghouse Air Brake vs. ResMed Inc
Performance |
| Timeline |
| Westinghouse Air Brake |
| ResMed Inc |
Westinghouse Air and ResMed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westinghouse Air and ResMed
The main advantage of trading using opposite Westinghouse Air and ResMed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westinghouse Air position performs unexpectedly, ResMed 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 ResMed will offset losses from the drop in ResMed's long position.| Westinghouse Air vs. Canadian National Railway | Westinghouse Air vs. MTR Limited | Westinghouse Air vs. CRRC Limited | Westinghouse Air vs. Central Japan Railway |
| ResMed vs. Mobilezone Holding AG | ResMed vs. Verizon Communications | ResMed vs. MAVEN WIRELESS SWEDEN | ResMed vs. Suntory Beverage Food |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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