Correlation Between Westinghouse Air and KURITA WTR

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

Diversification Opportunities for Westinghouse Air and KURITA WTR

-0.19

Correlation Coefficient

Westinghouse Air  KURITA WTR

Good diversification

The 3 months correlation between Westinghouse and KURITA is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Westinghouse Air Brake and KURITA WTR INDUNSPADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KURITA WTR INDUNSPADR 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 KURITA WTR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KURITA WTR INDUNSPADR has no effect on the direction of Westinghouse Air i.e., Westinghouse Air and KURITA WTR go up and down completely randomly.

Pair Corralation between Westinghouse Air and KURITA WTR

Assuming the 90 days horizon Westinghouse Air Brake is expected to under-perform the KURITA WTR. In addition to that, Westinghouse Air is 1.01 times more volatile than KURITA WTR INDUNSPADR. It trades about -0.33 of its total potential returns per unit of risk. KURITA WTR INDUNSPADR is currently generating about -0.11 per unit of volatility. If you would invest  7,050  in KURITA WTR INDUNSPADR on October 12, 2024 and sell it today you would lose (150.00) from holding KURITA WTR INDUNSPADR or give up 2.13% of portfolio value over 90 days.

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

Westinghouse Air Brake  vs.  KURITA WTR INDUNSPADR

Westinghouse Air Brake

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Westinghouse Air Brake are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Westinghouse Air may actually be approaching a critical reversion point that can send shares even higher in February 2025.

KURITA WTR INDUNSPADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KURITA WTR INDUNSPADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's forward indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Westinghouse Air and KURITA WTR

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

The idea behind Westinghouse Air Brake and KURITA WTR INDUNSPADR 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.