Correlation Between Westinghouse Air and Singapore Reinsurance
Can any of the company-specific risk be diversified away by investing in both Westinghouse Air and Singapore Reinsurance 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 Singapore Reinsurance 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 Singapore Reinsurance, you can compare the effects of market volatilities on Westinghouse Air and Singapore Reinsurance 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 Singapore Reinsurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westinghouse Air and Singapore Reinsurance.
Diversification Opportunities for Westinghouse Air and Singapore Reinsurance
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Westinghouse and Singapore is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Westinghouse Air Brake and Singapore Reinsurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singapore Reinsurance 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 Singapore Reinsurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Singapore Reinsurance has no effect on the direction of Westinghouse Air i.e., Westinghouse Air and Singapore Reinsurance go up and down completely randomly.
Pair Corralation between Westinghouse Air and Singapore Reinsurance
Assuming the 90 days horizon Westinghouse Air Brake is expected to generate 0.68 times more return on investment than Singapore Reinsurance. However, Westinghouse Air Brake is 1.46 times less risky than Singapore Reinsurance. It trades about 0.13 of its potential returns per unit of risk. Singapore Reinsurance is currently generating about 0.06 per unit of risk. If you would invest 13,051 in Westinghouse Air Brake on September 1, 2024 and sell it today you would earn a total of 5,849 from holding Westinghouse Air Brake or generate 44.82% 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. Singapore Reinsurance
Performance |
| Timeline |
| Westinghouse Air Brake |
| Singapore Reinsurance |
Westinghouse Air and Singapore Reinsurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westinghouse Air and Singapore Reinsurance
The main advantage of trading using opposite Westinghouse Air and Singapore Reinsurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westinghouse Air position performs unexpectedly, Singapore Reinsurance 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 Singapore Reinsurance will offset losses from the drop in Singapore Reinsurance's long position.| Westinghouse Air vs. Union Pacific | Westinghouse Air vs. Superior Plus Corp | Westinghouse Air vs. NMI Holdings | Westinghouse Air vs. Origin Agritech |
| Singapore Reinsurance vs. SIVERS SEMICONDUCTORS AB | Singapore Reinsurance vs. Darden Restaurants | Singapore Reinsurance vs. Reliance Steel Aluminum | Singapore Reinsurance vs. Q2M Managementberatung AG |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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