Correlation Between Westinghouse Air and CSX
Can any of the company-specific risk be diversified away by investing in both Westinghouse Air and CSX 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 CSX 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 CSX Corporation, you can compare the effects of market volatilities on Westinghouse Air and CSX 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 CSX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westinghouse Air and CSX.
Diversification Opportunities for Westinghouse Air and CSX
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Westinghouse and CSX is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Westinghouse Air Brake and CSX Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSX Corporation 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 CSX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSX Corporation has no effect on the direction of Westinghouse Air i.e., Westinghouse Air and CSX go up and down completely randomly.
Pair Corralation between Westinghouse Air and CSX
Considering the 90-day investment horizon Westinghouse Air Brake is expected to generate 1.26 times more return on investment than CSX. However, Westinghouse Air is 1.26 times more volatile than CSX Corporation. It trades about 0.08 of its potential returns per unit of risk. CSX Corporation is currently generating about 0.06 per unit of risk. If you would invest 18,165 in Westinghouse Air Brake on March 17, 2025 and sell it today you would earn a total of 2,005 from holding Westinghouse Air Brake or generate 11.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westinghouse Air Brake vs. CSX Corp.
Performance |
| Timeline |
| Westinghouse Air Brake |
| CSX Corporation |
Westinghouse Air and CSX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westinghouse Air and CSX
The main advantage of trading using opposite Westinghouse Air and CSX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westinghouse Air position performs unexpectedly, CSX 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 CSX will offset losses from the drop in CSX's long position.| Westinghouse Air vs. Greenbrier Companies | Westinghouse Air vs. LB Foster | Westinghouse Air vs. Freightcar America | Westinghouse Air vs. CSX Corporation |
| CSX vs. Union Pacific | CSX vs. Canadian National Railway | CSX vs. Canadian Pacific Railway | CSX vs. Westinghouse Air Brake |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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