Correlation Between Westinghouse Air and Evolution Mining
Can any of the company-specific risk be diversified away by investing in both Westinghouse Air and Evolution Mining 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 Evolution Mining 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 Evolution Mining Limited, you can compare the effects of market volatilities on Westinghouse Air and Evolution Mining 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 Evolution Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westinghouse Air and Evolution Mining.
Diversification Opportunities for Westinghouse Air and Evolution Mining
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Westinghouse and Evolution is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Westinghouse Air Brake and Evolution Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolution Mining 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 Evolution Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolution Mining has no effect on the direction of Westinghouse Air i.e., Westinghouse Air and Evolution Mining go up and down completely randomly.
Pair Corralation between Westinghouse Air and Evolution Mining
Assuming the 90 days horizon Westinghouse Air Brake is expected to generate 0.57 times more return on investment than Evolution Mining. However, Westinghouse Air Brake is 1.74 times less risky than Evolution Mining. It trades about 0.15 of its potential returns per unit of risk. Evolution Mining Limited is currently generating about 0.05 per unit of risk. If you would invest 10,961 in Westinghouse Air Brake on August 29, 2024 and sell it today you would earn a total of 8,074 from holding Westinghouse Air Brake or generate 73.66% 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. Evolution Mining Limited
Performance |
| Timeline |
| Westinghouse Air Brake |
| Evolution Mining |
Westinghouse Air and Evolution Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westinghouse Air and Evolution Mining
The main advantage of trading using opposite Westinghouse Air and Evolution Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westinghouse Air position performs unexpectedly, Evolution Mining 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 Evolution Mining will offset losses from the drop in Evolution Mining's long position.| Westinghouse Air vs. ScanSource | Westinghouse Air vs. Marie Brizard Wine | Westinghouse Air vs. China Resources Beer | Westinghouse Air vs. Chunghwa Telecom Co |
| Evolution Mining vs. Franco Nevada | Evolution Mining vs. Agnico Eagle Mines | Evolution Mining vs. Superior Plus Corp | Evolution Mining vs. NMI Holdings |
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.
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