Correlation Between Westinghouse Air and VF
Can any of the company-specific risk be diversified away by investing in both Westinghouse Air and VF 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 VF 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 VF Corporation, you can compare the effects of market volatilities on Westinghouse Air and VF 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 VF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westinghouse Air and VF.
Diversification Opportunities for Westinghouse Air and VF
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Westinghouse and VF is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Westinghouse Air Brake and VF Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VF Corporation 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 VF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VF Corporation has no effect on the direction of Westinghouse Air i.e., Westinghouse Air and VF go up and down completely randomly.
Pair Corralation between Westinghouse Air and VF
Assuming the 90 days horizon Westinghouse Air is expected to generate 2.34 times less return on investment than VF. But when comparing it to its historical volatility, Westinghouse Air Brake is 2.76 times less risky than VF. It trades about 0.12 of its potential returns per unit of risk. VF Corporation is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,161 in VF Corporation on September 3, 2024 and sell it today you would earn a total of 711.00 from holding VF Corporation or generate 61.24% 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. VF Corp.
Performance |
| Timeline |
| Westinghouse Air Brake |
| VF Corporation |
Westinghouse Air and VF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westinghouse Air and VF
The main advantage of trading using opposite Westinghouse Air and VF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westinghouse Air position performs unexpectedly, VF 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 VF will offset losses from the drop in VF'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 |
| VF vs. STMicroelectronics NV | VF vs. Harmony Gold Mining | VF vs. Electronic Arts | VF vs. Meiko Electronics Co |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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