Correlation Between Westinghouse Air and Transport International

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

Diversification Opportunities for Westinghouse Air and Transport International

0.64

Correlation Coefficient

Westinghouse Air  Transport International

Poor diversification

The 3 months correlation between Westinghouse and Transport is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Westinghouse Air Brake and Transport International Holdin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transport International 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 Transport International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transport International has no effect on the direction of Westinghouse Air i.e., Westinghouse Air and Transport International go up and down completely randomly.

Pair Corralation between Westinghouse Air and Transport International

Assuming the 90 days horizon Westinghouse Air Brake is expected to generate 0.52 times more return on investment than Transport International. However, Westinghouse Air Brake is 1.92 times less risky than Transport International. It trades about 0.18 of its potential returns per unit of risk. Transport International Holdings is currently generating about 0.05 per unit of risk. If you would invest  14,912  in Westinghouse Air Brake on April 20, 2025 and sell it today you would earn a total of  3,188  from holding Westinghouse Air Brake or generate 21.38% return on investment over 90 days.

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

Westinghouse Air Brake  vs.  Transport International Holdin

Westinghouse Air Brake

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Westinghouse Air Brake are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Westinghouse Air reported solid returns over the last few months and may actually be approaching a breakup point.

Transport International

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Transport International Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Transport International may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Westinghouse Air and Transport International

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

The idea behind Westinghouse Air Brake and Transport International Holdings 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.