Correlation Between Host Hotels and Westlake Chemical
Can any of the company-specific risk be diversified away by investing in both Host Hotels and Westlake Chemical 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 Host Hotels and Westlake Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Host Hotels Resorts and Westlake Chemical Corp, you can compare the effects of market volatilities on Host Hotels and Westlake Chemical 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 Host Hotels with a short position of Westlake Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Host Hotels and Westlake Chemical.
Diversification Opportunities for Host Hotels and Westlake Chemical
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Host and Westlake is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Host Hotels Resorts and Westlake Chemical Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westlake Chemical Corp and Host Hotels 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 Host Hotels Resorts are associated (or correlated) with Westlake Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westlake Chemical Corp has no effect on the direction of Host Hotels i.e., Host Hotels and Westlake Chemical go up and down completely randomly.
Pair Corralation between Host Hotels and Westlake Chemical
Assuming the 90 days trading horizon Host Hotels Resorts is expected to generate 0.96 times more return on investment than Westlake Chemical. However, Host Hotels Resorts is 1.05 times less risky than Westlake Chemical. It trades about 0.12 of its potential returns per unit of risk. Westlake Chemical Corp is currently generating about -0.03 per unit of risk. If you would invest 1,779 in Host Hotels Resorts on August 31, 2024 and sell it today you would earn a total of 72.00 from holding Host Hotels Resorts or generate 4.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Host Hotels Resorts vs. Westlake Chemical Corp
Performance |
| Timeline |
| Host Hotels Resorts |
| Westlake Chemical Corp |
Host Hotels and Westlake Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Host Hotels and Westlake Chemical
The main advantage of trading using opposite Host Hotels and Westlake Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Host Hotels position performs unexpectedly, Westlake Chemical 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 Westlake Chemical will offset losses from the drop in Westlake Chemical's long position.| Host Hotels vs. Neometals | Host Hotels vs. Coor Service Management | Host Hotels vs. Aeorema Communications Plc | Host Hotels vs. JLEN Environmental Assets |
| Westlake Chemical vs. Neometals | Westlake Chemical vs. Coor Service Management | Westlake Chemical vs. Aeorema Communications Plc | Westlake Chemical vs. JLEN Environmental Assets |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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