Correlation Between Liberty Media and Westlake Chemical
Can any of the company-specific risk be diversified away by investing in both Liberty Media 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 Liberty Media and Westlake Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Liberty Media Corp and Westlake Chemical Corp, you can compare the effects of market volatilities on Liberty Media 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 Liberty Media with a short position of Westlake Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liberty Media and Westlake Chemical.
Diversification Opportunities for Liberty Media and Westlake Chemical
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Liberty and Westlake is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Media Corp 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 Liberty Media 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 Liberty Media Corp 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 Liberty Media i.e., Liberty Media and Westlake Chemical go up and down completely randomly.
Pair Corralation between Liberty Media and Westlake Chemical
Assuming the 90 days trading horizon Liberty Media Corp is expected to generate 0.92 times more return on investment than Westlake Chemical. However, Liberty Media Corp is 1.09 times less risky than Westlake Chemical. It trades about 0.04 of its potential returns per unit of risk. Westlake Chemical Corp is currently generating about 0.0 per unit of risk. If you would invest 6,302 in Liberty Media Corp on November 5, 2024 and sell it today you would earn a total of 2,446 from holding Liberty Media Corp or generate 38.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 84.91% |
| Values | Daily Returns |
Liberty Media Corp vs. Westlake Chemical Corp
Performance |
| Timeline |
| Liberty Media Corp |
| Westlake Chemical Corp |
Liberty Media and Westlake Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Liberty Media and Westlake Chemical
The main advantage of trading using opposite Liberty Media and Westlake Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liberty Media 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.| Liberty Media vs. STMicroelectronics NV | Liberty Media vs. Vitec Software Group | Liberty Media vs. Raytheon Technologies Corp | Liberty Media vs. CleanTech Lithium plc |
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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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