Correlation Between Westinghouse Air and Ross Stores
Can any of the company-specific risk be diversified away by investing in both Westinghouse Air and Ross Stores 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 Ross Stores 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 Ross Stores, you can compare the effects of market volatilities on Westinghouse Air and Ross Stores 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 Ross Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westinghouse Air and Ross Stores.
Diversification Opportunities for Westinghouse Air and Ross Stores
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Westinghouse and Ross is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Westinghouse Air Brake and Ross Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ross Stores 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 Ross Stores. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ross Stores has no effect on the direction of Westinghouse Air i.e., Westinghouse Air and Ross Stores go up and down completely randomly.
Pair Corralation between Westinghouse Air and Ross Stores
Assuming the 90 days horizon Westinghouse Air Brake is expected to generate 0.71 times more return on investment than Ross Stores. However, Westinghouse Air Brake is 1.41 times less risky than Ross Stores. It trades about 0.43 of its potential returns per unit of risk. Ross Stores is currently generating about 0.06 per unit of risk. If you would invest 18,230 in Westinghouse Air Brake on October 20, 2024 and sell it today you would earn a total of 1,235 from holding Westinghouse Air Brake or generate 6.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westinghouse Air Brake vs. Ross Stores
Performance |
| Timeline |
| Westinghouse Air Brake |
| Ross Stores |
Westinghouse Air and Ross Stores Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westinghouse Air and Ross Stores
The main advantage of trading using opposite Westinghouse Air and Ross Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westinghouse Air position performs unexpectedly, Ross Stores 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 Ross Stores will offset losses from the drop in Ross Stores' long position.| Westinghouse Air vs. ALERION CLEANPOWER | Westinghouse Air vs. Performance Food Group | Westinghouse Air vs. LIFEWAY FOODS | Westinghouse Air vs. Clean Energy Fuels |
| Ross Stores vs. FAST RETAILCOSPHDR 1 | Ross Stores vs. FAST RETAIL ADR | Ross Stores vs. Designer Brands | Ross Stores vs. Genesco |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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