Correlation Between Westinghouse Air and Columbia Sportswear

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

Diversification Opportunities for Westinghouse Air and Columbia Sportswear

WestinghouseColumbiaDiversified AwayWestinghouseColumbiaDiversified Away100%
0.22
  Correlation Coefficient

Modest diversification

The 3 months correlation between Westinghouse and Columbia is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Westinghouse Air Brake and Columbia Sportswear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Sportswear 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 Columbia Sportswear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Sportswear has no effect on the direction of Westinghouse Air i.e., Westinghouse Air and Columbia Sportswear go up and down completely randomly.

Pair Corralation between Westinghouse Air and Columbia Sportswear

Assuming the 90 days horizon Westinghouse Air Brake is expected to generate 0.92 times more return on investment than Columbia Sportswear. However, Westinghouse Air Brake is 1.09 times less risky than Columbia Sportswear. It trades about 0.09 of its potential returns per unit of risk. Columbia Sportswear is currently generating about 0.01 per unit of risk. If you would invest  9,640  in Westinghouse Air Brake on November 19, 2024 and sell it today you would earn a total of  8,980  from holding Westinghouse Air Brake or generate 93.15% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Westinghouse Air Brake  vs.  Columbia Sportswear

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb 0510
JavaScript chart by amCharts 3.21.15WB2 CUW
       Timeline  
Westinghouse Air Brake 

Risk-Adjusted Performance

Weak

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Westinghouse Air Brake are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Westinghouse Air is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb180185190195200
Columbia Sportswear 

Risk-Adjusted Performance

Weak

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Columbia Sportswear are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Columbia Sportswear is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb767880828486

Westinghouse Air and Columbia Sportswear Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-5.15-3.86-2.56-1.270.01.252.553.855.146.44 0.020.040.060.080.100.120.14
JavaScript chart by amCharts 3.21.15WB2 CUW
       Returns  

Pair Trading with Westinghouse Air and Columbia Sportswear

The main advantage of trading using opposite Westinghouse Air and Columbia Sportswear positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westinghouse Air position performs unexpectedly, Columbia Sportswear 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 Columbia Sportswear will offset losses from the drop in Columbia Sportswear's long position.
The idea behind Westinghouse Air Brake and Columbia Sportswear 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.

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