Correlation Between Westinghouse Air and Pure Storage,

Can any of the company-specific risk be diversified away by investing in both Westinghouse Air and Pure Storage, 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 Pure Storage, 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 Pure Storage,, you can compare the effects of market volatilities on Westinghouse Air and Pure Storage, 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 Pure Storage,. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westinghouse Air and Pure Storage,.

Diversification Opportunities for Westinghouse Air and Pure Storage,

0.87

Correlation Coefficient

Westinghouse Air  Pure Storage,

Very poor diversification

The 3 months correlation between Westinghouse and Pure is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Westinghouse Air Brake and Pure Storage, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pure Storage, 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 Pure Storage,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pure Storage, has no effect on the direction of Westinghouse Air i.e., Westinghouse Air and Pure Storage, go up and down completely randomly.

Pair Corralation between Westinghouse Air and Pure Storage,

Assuming the 90 days trading horizon Westinghouse Air Brake is expected to generate 0.56 times more return on investment than Pure Storage,. However, Westinghouse Air Brake is 1.8 times less risky than Pure Storage,. It trades about -0.09 of its potential returns per unit of risk. Pure Storage, is currently generating about -0.12 per unit of risk. If you would invest  59,483  in Westinghouse Air Brake on December 26, 2024 and sell it today you would lose (5,645) from holding Westinghouse Air Brake or give up 9.49% of portfolio value over 90 days.

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

Westinghouse Air Brake  vs.  Pure Storage,

Westinghouse Air Brake

Risk-Adjusted Performance

Very Weak

Over the last 90 days Westinghouse Air Brake has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pure Storage,

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pure Storage, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Westinghouse Air and Pure Storage,

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

The idea behind Westinghouse Air Brake and Pure Storage, 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.