Correlation Between Westinghouse Air and CopAur Minerals

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

Diversification Opportunities for Westinghouse Air and CopAur Minerals

-0.73

Correlation Coefficient

Westinghouse Air  CopAur Minerals

Pay attention - limited upside

The 3 months correlation between Westinghouse and CopAur is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Westinghouse Air Brake and CopAur Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CopAur Minerals 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 CopAur Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CopAur Minerals has no effect on the direction of Westinghouse Air i.e., Westinghouse Air and CopAur Minerals go up and down completely randomly.

Pair Corralation between Westinghouse Air and CopAur Minerals

Considering the 90-day investment horizon Westinghouse Air Brake is expected to generate 0.12 times more return on investment than CopAur Minerals. However, Westinghouse Air Brake is 8.02 times less risky than CopAur Minerals. It trades about 0.25 of its potential returns per unit of risk. CopAur Minerals is currently generating about -0.04 per unit of risk. If you would invest  17,002  in Westinghouse Air Brake on September 15, 2024 and sell it today you would earn a total of  2,966  from holding Westinghouse Air Brake or generate 17.45% return on investment over 90 days.

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

Westinghouse Air Brake  vs.  CopAur Minerals

Westinghouse Air Brake

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Westinghouse Air Brake are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Westinghouse Air sustained solid returns over the last few months and may actually be approaching a breakup point.

CopAur Minerals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CopAur Minerals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Westinghouse Air and CopAur Minerals

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

The idea behind Westinghouse Air Brake and CopAur Minerals 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.