Correlation Between Westinghouse Air and AUSTEVOLL SEAFOOD
Can any of the company-specific risk be diversified away by investing in both Westinghouse Air and AUSTEVOLL SEAFOOD 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 AUSTEVOLL SEAFOOD 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 AUSTEVOLL SEAFOOD, you can compare the effects of market volatilities on Westinghouse Air and AUSTEVOLL SEAFOOD 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 AUSTEVOLL SEAFOOD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westinghouse Air and AUSTEVOLL SEAFOOD.
Diversification Opportunities for Westinghouse Air and AUSTEVOLL SEAFOOD
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Westinghouse and AUSTEVOLL is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Westinghouse Air Brake and AUSTEVOLL SEAFOOD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AUSTEVOLL SEAFOOD 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 AUSTEVOLL SEAFOOD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AUSTEVOLL SEAFOOD has no effect on the direction of Westinghouse Air i.e., Westinghouse Air and AUSTEVOLL SEAFOOD go up and down completely randomly.
Pair Corralation between Westinghouse Air and AUSTEVOLL SEAFOOD
Assuming the 90 days horizon Westinghouse Air Brake is expected to generate 0.99 times more return on investment than AUSTEVOLL SEAFOOD. However, Westinghouse Air Brake is 1.01 times less risky than AUSTEVOLL SEAFOOD. It trades about 0.32 of its potential returns per unit of risk. AUSTEVOLL SEAFOOD is currently generating about 0.11 per unit of risk. If you would invest 14,574 in Westinghouse Air Brake on September 5, 2024 and sell it today you would earn a total of 4,556 from holding Westinghouse Air Brake or generate 31.26% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 98.46% |
Values | Daily Returns |
Westinghouse Air Brake vs. AUSTEVOLL SEAFOOD
Performance |
Timeline |
Westinghouse Air Brake |
AUSTEVOLL SEAFOOD |
Westinghouse Air and AUSTEVOLL SEAFOOD Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Westinghouse Air and AUSTEVOLL SEAFOOD
The main advantage of trading using opposite Westinghouse Air and AUSTEVOLL SEAFOOD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westinghouse Air position performs unexpectedly, AUSTEVOLL SEAFOOD 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 AUSTEVOLL SEAFOOD will offset losses from the drop in AUSTEVOLL SEAFOOD's long position.Westinghouse Air vs. Superior Plus Corp | Westinghouse Air vs. NMI Holdings | Westinghouse Air vs. Origin Agritech | Westinghouse Air vs. SIVERS SEMICONDUCTORS AB |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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