Correlation Between Westinghouse Air and Shoprite Holdings
Can any of the company-specific risk be diversified away by investing in both Westinghouse Air and Shoprite Holdings 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 Shoprite Holdings 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 Shoprite Holdings Limited, you can compare the effects of market volatilities on Westinghouse Air and Shoprite Holdings 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 Shoprite Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westinghouse Air and Shoprite Holdings.
Diversification Opportunities for Westinghouse Air and Shoprite Holdings
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Westinghouse and Shoprite is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Westinghouse Air Brake and Shoprite Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shoprite Holdings 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 Shoprite Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shoprite Holdings has no effect on the direction of Westinghouse Air i.e., Westinghouse Air and Shoprite Holdings go up and down completely randomly.
Pair Corralation between Westinghouse Air and Shoprite Holdings
If you would invest 1,633 in Shoprite Holdings Limited on September 26, 2024 and sell it today you would earn a total of 0.00 from holding Shoprite Holdings Limited or generate 0.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 4.76% |
Values | Daily Returns |
Westinghouse Air Brake vs. Shoprite Holdings Limited
Performance |
Timeline |
Westinghouse Air Brake |
Shoprite Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Westinghouse Air and Shoprite Holdings Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Westinghouse Air and Shoprite Holdings
The main advantage of trading using opposite Westinghouse Air and Shoprite Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westinghouse Air position performs unexpectedly, Shoprite Holdings 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 Shoprite Holdings will offset losses from the drop in Shoprite Holdings' long position.Westinghouse Air vs. Greenbrier Companies | Westinghouse Air vs. LB Foster | Westinghouse Air vs. Freightcar America | Westinghouse Air vs. CSX Corporation |
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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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