Correlation Between Sealed Air and Westlake Chemical
Can any of the company-specific risk be diversified away by investing in both Sealed Air 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 Sealed Air and Westlake Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sealed Air Corp and Westlake Chemical Corp, you can compare the effects of market volatilities on Sealed Air 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 Sealed Air with a short position of Westlake Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sealed Air and Westlake Chemical.
Diversification Opportunities for Sealed Air and Westlake Chemical
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sealed and Westlake is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Sealed Air 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 Sealed 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 Sealed Air 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 Sealed Air i.e., Sealed Air and Westlake Chemical go up and down completely randomly.
Pair Corralation between Sealed Air and Westlake Chemical
Assuming the 90 days trading horizon Sealed Air Corp is expected to under-perform the Westlake Chemical. In addition to that, Sealed Air is 1.02 times more volatile than Westlake Chemical Corp. It trades about -0.03 of its total potential returns per unit of risk. Westlake Chemical Corp is currently generating about 0.01 per unit of volatility. If you would invest 12,028 in Westlake Chemical Corp on October 25, 2024 and sell it today you would lose (206.00) from holding Westlake Chemical Corp or give up 1.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 91.99% |
| Values | Daily Returns |
Sealed Air Corp vs. Westlake Chemical Corp
Performance |
| Timeline |
| Sealed Air Corp |
| Westlake Chemical Corp |
Sealed Air and Westlake Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sealed Air and Westlake Chemical
The main advantage of trading using opposite Sealed Air and Westlake Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sealed Air 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.| Sealed Air vs. First Majestic Silver | Sealed Air vs. Invesco Physical Silver | Sealed Air vs. Blackrock World Mining | Sealed Air vs. Coeur Mining |
| Westlake Chemical vs. Futura Medical | Westlake Chemical vs. Ebro Foods | Westlake Chemical vs. Rheinmetall AG | Westlake Chemical vs. Coeur Mining |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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