Correlation Between Westinghouse Air and EMPLOYERS HLDGS
Can any of the company-specific risk be diversified away by investing in both Westinghouse Air and EMPLOYERS HLDGS 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 EMPLOYERS HLDGS 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 EMPLOYERS HLDGS DL, you can compare the effects of market volatilities on Westinghouse Air and EMPLOYERS HLDGS 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 EMPLOYERS HLDGS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westinghouse Air and EMPLOYERS HLDGS.
Diversification Opportunities for Westinghouse Air and EMPLOYERS HLDGS
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Westinghouse and EMPLOYERS is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Westinghouse Air Brake and EMPLOYERS HLDGS DL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMPLOYERS HLDGS DL 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 EMPLOYERS HLDGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMPLOYERS HLDGS DL has no effect on the direction of Westinghouse Air i.e., Westinghouse Air and EMPLOYERS HLDGS go up and down completely randomly.
Pair Corralation between Westinghouse Air and EMPLOYERS HLDGS
Assuming the 90 days horizon Westinghouse Air Brake is expected to under-perform the EMPLOYERS HLDGS. In addition to that, Westinghouse Air is 1.3 times more volatile than EMPLOYERS HLDGS DL. It trades about -0.19 of its total potential returns per unit of risk. EMPLOYERS HLDGS DL is currently generating about -0.15 per unit of volatility. If you would invest 5,050 in EMPLOYERS HLDGS DL on October 1, 2024 and sell it today you would lose (130.00) from holding EMPLOYERS HLDGS DL or give up 2.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westinghouse Air Brake vs. EMPLOYERS HLDGS DL
Performance |
| Timeline |
| Westinghouse Air Brake |
| EMPLOYERS HLDGS DL |
Westinghouse Air and EMPLOYERS HLDGS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westinghouse Air and EMPLOYERS HLDGS
The main advantage of trading using opposite Westinghouse Air and EMPLOYERS HLDGS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westinghouse Air position performs unexpectedly, EMPLOYERS HLDGS 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 EMPLOYERS HLDGS will offset losses from the drop in EMPLOYERS HLDGS's long position.The idea behind Westinghouse Air Brake and EMPLOYERS HLDGS DL pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| EMPLOYERS HLDGS vs. First American Financial | EMPLOYERS HLDGS vs. nib holdings limited | EMPLOYERS HLDGS vs. Lancashire Holdings Limited | EMPLOYERS HLDGS vs. Trisura Group |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
Other Complementary Tools
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes |