Correlation Between Westinghouse Air and Corsair Gaming

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

Diversification Opportunities for Westinghouse Air and Corsair Gaming

0.78

Correlation Coefficient

Westinghouse Air  Corsair Gaming

Poor diversification

The 3 months correlation between Westinghouse and Corsair is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Westinghouse Air Brake and Corsair Gaming in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corsair Gaming 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 Corsair Gaming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corsair Gaming has no effect on the direction of Westinghouse Air i.e., Westinghouse Air and Corsair Gaming go up and down completely randomly.

Pair Corralation between Westinghouse Air and Corsair Gaming

Assuming the 90 days horizon Westinghouse Air is expected to generate 1.84 times less return on investment than Corsair Gaming. But when comparing it to its historical volatility, Westinghouse Air Brake is 3.2 times less risky than Corsair Gaming. It trades about 0.27 of its potential returns per unit of risk. Corsair Gaming is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  534.00  in Corsair Gaming on September 13, 2024 and sell it today you would earn a total of  236.00  from holding Corsair Gaming or generate 44.19% return on investment over 90 days.

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

Westinghouse Air Brake  vs.  Corsair Gaming

Westinghouse Air Brake

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Westinghouse Air Brake are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Westinghouse Air reported solid returns over the last few months and may actually be approaching a breakup point.

Corsair Gaming

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Corsair Gaming are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Corsair Gaming reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Westinghouse Air and Corsair Gaming

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

The idea behind Westinghouse Air Brake and Corsair Gaming 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.