Correlation Between Westinghouse Air and Nextracker
Can any of the company-specific risk be diversified away by investing in both Westinghouse Air and Nextracker 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 Nextracker 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 Nextracker Class A, you can compare the effects of market volatilities on Westinghouse Air and Nextracker 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 Nextracker. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westinghouse Air and Nextracker.
Diversification Opportunities for Westinghouse Air and Nextracker
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Westinghouse and Nextracker is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Westinghouse Air Brake and Nextracker Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextracker Class A 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 Nextracker. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextracker Class A has no effect on the direction of Westinghouse Air i.e., Westinghouse Air and Nextracker go up and down completely randomly.
Pair Corralation between Westinghouse Air and Nextracker
Considering the 90-day investment horizon Westinghouse Air Brake is expected to generate 0.46 times more return on investment than Nextracker. However, Westinghouse Air Brake is 2.19 times less risky than Nextracker. It trades about 0.13 of its potential returns per unit of risk. Nextracker Class A is currently generating about 0.03 per unit of risk. If you would invest 14,138 in Westinghouse Air Brake on March 16, 2024 and sell it today you would earn a total of 1,842 from holding Westinghouse Air Brake or generate 13.03% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Westinghouse Air Brake vs. Nextracker Class A
Performance |
Timeline |
Westinghouse Air Brake |
Nextracker Class A |
Westinghouse Air and Nextracker Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Westinghouse Air and Nextracker
The main advantage of trading using opposite Westinghouse Air and Nextracker positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westinghouse Air position performs unexpectedly, Nextracker 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 Nextracker will offset losses from the drop in Nextracker's long position.Westinghouse Air vs. LB Foster | Westinghouse Air vs. CSX Corporation | Westinghouse Air vs. Norfolk Southern | Westinghouse Air vs. Union Pacific |
Nextracker vs. SPI Energy Co | Nextracker vs. Zeo Energy Corp | Nextracker vs. Sunnova Energy International | Nextracker vs. Zeo Energy Corp |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
Other Complementary Tools
Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments |