Correlation Between Westinghouse Air and Tower Semiconductor
Can any of the company-specific risk be diversified away by investing in both Westinghouse Air and Tower Semiconductor 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 Tower Semiconductor 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 Tower Semiconductor, you can compare the effects of market volatilities on Westinghouse Air and Tower Semiconductor 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 Tower Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westinghouse Air and Tower Semiconductor.
Diversification Opportunities for Westinghouse Air and Tower Semiconductor
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Westinghouse and Tower is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Westinghouse Air Brake and Tower Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tower Semiconductor 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 Tower Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tower Semiconductor has no effect on the direction of Westinghouse Air i.e., Westinghouse Air and Tower Semiconductor go up and down completely randomly.
Pair Corralation between Westinghouse Air and Tower Semiconductor
Assuming the 90 days horizon Westinghouse Air Brake is expected to generate 0.65 times more return on investment than Tower Semiconductor. However, Westinghouse Air Brake is 1.53 times less risky than Tower Semiconductor. It trades about 0.1 of its potential returns per unit of risk. Tower Semiconductor is currently generating about 0.02 per unit of risk. If you would invest 9,384 in Westinghouse Air Brake on September 3, 2024 and sell it today you would earn a total of 9,691 from holding Westinghouse Air Brake or generate 103.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westinghouse Air Brake vs. Tower Semiconductor
Performance |
| Timeline |
| Westinghouse Air Brake |
| Tower Semiconductor |
Westinghouse Air and Tower Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westinghouse Air and Tower Semiconductor
The main advantage of trading using opposite Westinghouse Air and Tower Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westinghouse Air position performs unexpectedly, Tower Semiconductor 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 Tower Semiconductor will offset losses from the drop in Tower Semiconductor's long position.| Westinghouse Air vs. Superior Plus Corp | Westinghouse Air vs. NMI Holdings | Westinghouse Air vs. Origin Agritech | Westinghouse Air vs. SIVERS SEMICONDUCTORS AB |
| Tower Semiconductor vs. NVIDIA | Tower Semiconductor vs. Taiwan Semiconductor Manufacturing | Tower Semiconductor vs. Advanced Micro Devices | Tower Semiconductor vs. Intel |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
Other Complementary Tools
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities |