Correlation Between Westinghouse Air and STRAYER EDUCATION
Can any of the company-specific risk be diversified away by investing in both Westinghouse Air and STRAYER EDUCATION 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 STRAYER EDUCATION 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 STRAYER EDUCATION, you can compare the effects of market volatilities on Westinghouse Air and STRAYER EDUCATION 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 STRAYER EDUCATION. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westinghouse Air and STRAYER EDUCATION.
Diversification Opportunities for Westinghouse Air and STRAYER EDUCATION
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Westinghouse and STRAYER is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Westinghouse Air Brake and STRAYER EDUCATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STRAYER EDUCATION 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 STRAYER EDUCATION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STRAYER EDUCATION has no effect on the direction of Westinghouse Air i.e., Westinghouse Air and STRAYER EDUCATION go up and down completely randomly.
Pair Corralation between Westinghouse Air and STRAYER EDUCATION
Assuming the 90 days horizon Westinghouse Air is expected to generate 1.85 times less return on investment than STRAYER EDUCATION. But when comparing it to its historical volatility, Westinghouse Air Brake is 1.2 times less risky than STRAYER EDUCATION. It trades about 0.19 of its potential returns per unit of risk. STRAYER EDUCATION is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 8,000 in STRAYER EDUCATION on August 25, 2024 and sell it today you would earn a total of 1,150 from holding STRAYER EDUCATION or generate 14.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Westinghouse Air Brake vs. STRAYER EDUCATION
Performance |
| Timeline |
| Westinghouse Air Brake |
| STRAYER EDUCATION |
Westinghouse Air and STRAYER EDUCATION Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westinghouse Air and STRAYER EDUCATION
The main advantage of trading using opposite Westinghouse Air and STRAYER EDUCATION positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westinghouse Air position performs unexpectedly, STRAYER EDUCATION 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 STRAYER EDUCATION will offset losses from the drop in STRAYER EDUCATION's long position.| Westinghouse Air vs. Chunghwa Telecom Co | Westinghouse Air vs. Consolidated Communications Holdings | Westinghouse Air vs. Singapore Telecommunications Limited | Westinghouse Air vs. Rogers Communications |
| STRAYER EDUCATION vs. REGAL ASIAN INVESTMENTS | STRAYER EDUCATION vs. AOYAMA TRADING | STRAYER EDUCATION vs. Laureate Education | STRAYER EDUCATION vs. Gladstone Investment |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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