Correlation Between Westinghouse Air and Universal Entertainment
Can any of the company-specific risk be diversified away by investing in both Westinghouse Air and Universal Entertainment 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 Universal Entertainment 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 Universal Entertainment, you can compare the effects of market volatilities on Westinghouse Air and Universal Entertainment 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 Universal Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westinghouse Air and Universal Entertainment.
Diversification Opportunities for Westinghouse Air and Universal Entertainment
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Westinghouse and Universal is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Westinghouse Air Brake and Universal Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Entertainment 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 Universal Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Entertainment has no effect on the direction of Westinghouse Air i.e., Westinghouse Air and Universal Entertainment go up and down completely randomly.
Pair Corralation between Westinghouse Air and Universal Entertainment
Assuming the 90 days horizon Westinghouse Air Brake is expected to generate 0.55 times more return on investment than Universal Entertainment. However, Westinghouse Air Brake is 1.8 times less risky than Universal Entertainment. It trades about -0.14 of its potential returns per unit of risk. Universal Entertainment is currently generating about -0.12 per unit of risk. If you would invest 19,085 in Westinghouse Air Brake on October 5, 2024 and sell it today you would lose (600.00) from holding Westinghouse Air Brake or give up 3.14% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 94.44% |
Values | Daily Returns |
Westinghouse Air Brake vs. Universal Entertainment
Performance |
Timeline |
Westinghouse Air Brake |
Universal Entertainment |
Westinghouse Air and Universal Entertainment Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Westinghouse Air and Universal Entertainment
The main advantage of trading using opposite Westinghouse Air and Universal Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westinghouse Air position performs unexpectedly, Universal Entertainment 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 Universal Entertainment will offset losses from the drop in Universal Entertainment's long position.Westinghouse Air vs. GOLD ROAD RES | Westinghouse Air vs. Gold Road Resources | Westinghouse Air vs. JAPAN AIRLINES | Westinghouse Air vs. Air Transport Services |
Universal Entertainment vs. Apple Inc | Universal Entertainment vs. Apple Inc | Universal Entertainment vs. Apple Inc | Universal Entertainment vs. Apple Inc |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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