Correlation Between Westinghouse Air and Games Workshop
Can any of the company-specific risk be diversified away by investing in both Westinghouse Air and Games Workshop 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 Games Workshop 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 Games Workshop Group, you can compare the effects of market volatilities on Westinghouse Air and Games Workshop 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 Games Workshop. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westinghouse Air and Games Workshop.
Diversification Opportunities for Westinghouse Air and Games Workshop
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Westinghouse and Games is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Westinghouse Air Brake and Games Workshop Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Games Workshop Group 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 Games Workshop. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Games Workshop Group has no effect on the direction of Westinghouse Air i.e., Westinghouse Air and Games Workshop go up and down completely randomly.
Pair Corralation between Westinghouse Air and Games Workshop
Assuming the 90 days horizon Westinghouse Air Brake is expected to under-perform the Games Workshop. But the stock apears to be less risky and, when comparing its historical volatility, Westinghouse Air Brake is 1.79 times less risky than Games Workshop. The stock trades about -0.19 of its potential returns per unit of risk. The Games Workshop Group is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 15,860 in Games Workshop Group on September 24, 2024 and sell it today you would lose (170.00) from holding Games Workshop Group or give up 1.07% 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. Games Workshop Group
Performance |
Timeline |
Westinghouse Air Brake |
Games Workshop Group |
Westinghouse Air and Games Workshop Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Westinghouse Air and Games Workshop
The main advantage of trading using opposite Westinghouse Air and Games Workshop positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westinghouse Air position performs unexpectedly, Games Workshop 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 Games Workshop will offset losses from the drop in Games Workshop's long position.Westinghouse Air vs. Union Pacific | Westinghouse Air vs. Canadian National Railway | Westinghouse Air vs. CSX Corporation | Westinghouse Air vs. MTR Limited |
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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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