Correlation Between CANON MARKETING and Westinghouse Air

Can any of the company-specific risk be diversified away by investing in both CANON MARKETING and Westinghouse Air 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 CANON MARKETING and Westinghouse Air into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CANON MARKETING JP and Westinghouse Air Brake, you can compare the effects of market volatilities on CANON MARKETING and Westinghouse Air 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 CANON MARKETING with a short position of Westinghouse Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of CANON MARKETING and Westinghouse Air.

Diversification Opportunities for CANON MARKETING and Westinghouse Air

0.62

Correlation Coefficient

CANON MARKETING  Westinghouse Air

Poor diversification

The 3 months correlation between CANON and Westinghouse is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding CANON MARKETING JP and Westinghouse Air Brake in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westinghouse Air Brake and CANON MARKETING 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 CANON MARKETING JP are associated (or correlated) with Westinghouse Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westinghouse Air Brake has no effect on the direction of CANON MARKETING i.e., CANON MARKETING and Westinghouse Air go up and down completely randomly.

Pair Corralation between CANON MARKETING and Westinghouse Air

Assuming the 90 days trading horizon CANON MARKETING JP is expected to generate 0.97 times more return on investment than Westinghouse Air. However, CANON MARKETING JP is 1.04 times less risky than Westinghouse Air. It trades about 0.01 of its potential returns per unit of risk. Westinghouse Air Brake is currently generating about -0.21 per unit of risk. If you would invest  3,100  in CANON MARKETING JP on October 8, 2024 and sell it today you would earn a total of  0.00  from holding CANON MARKETING JP or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

CANON MARKETING JP  vs.  Westinghouse Air Brake

CANON MARKETING JP

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CANON MARKETING JP are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward-looking indicators, CANON MARKETING may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Westinghouse Air Brake

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Westinghouse Air Brake are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Westinghouse Air may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with CANON MARKETING and Westinghouse Air

The main advantage of trading using opposite CANON MARKETING and Westinghouse Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CANON MARKETING position performs unexpectedly, Westinghouse Air 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 Westinghouse Air will offset losses from the drop in Westinghouse Air's long position.

The idea behind CANON MARKETING JP and Westinghouse Air Brake 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.

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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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.