Correlation Between Westlake Chemical and Kaufman Et
Can any of the company-specific risk be diversified away by investing in both Westlake Chemical and Kaufman Et 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 Westlake Chemical and Kaufman Et into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westlake Chemical Corp and Kaufman Et Broad, you can compare the effects of market volatilities on Westlake Chemical and Kaufman Et 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 Westlake Chemical with a short position of Kaufman Et. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westlake Chemical and Kaufman Et.
Diversification Opportunities for Westlake Chemical and Kaufman Et
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Westlake and Kaufman is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Westlake Chemical Corp and Kaufman Et Broad in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaufman Et Broad and Westlake Chemical 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 Westlake Chemical Corp are associated (or correlated) with Kaufman Et. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kaufman Et Broad has no effect on the direction of Westlake Chemical i.e., Westlake Chemical and Kaufman Et go up and down completely randomly.
Pair Corralation between Westlake Chemical and Kaufman Et
Assuming the 90 days trading horizon Westlake Chemical is expected to generate 7.61 times less return on investment than Kaufman Et. In addition to that, Westlake Chemical is 1.16 times more volatile than Kaufman Et Broad. It trades about 0.01 of its total potential returns per unit of risk. Kaufman Et Broad is currently generating about 0.07 per unit of volatility. If you would invest 2,314 in Kaufman Et Broad on August 26, 2024 and sell it today you would earn a total of 951.00 from holding Kaufman Et Broad or generate 41.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 78.14% |
| Values | Daily Returns |
Westlake Chemical Corp vs. Kaufman Et Broad
Performance |
| Timeline |
| Westlake Chemical Corp |
| Kaufman Et Broad |
Westlake Chemical and Kaufman Et Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westlake Chemical and Kaufman Et
The main advantage of trading using opposite Westlake Chemical and Kaufman Et positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westlake Chemical position performs unexpectedly, Kaufman Et 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 Kaufman Et will offset losses from the drop in Kaufman Et's long position.| Westlake Chemical vs. Samsung Electronics Co | Westlake Chemical vs. Samsung Electronics Co | Westlake Chemical vs. Hyundai Motor | Westlake Chemical vs. Toyota Motor Corp |
| Kaufman Et vs. Samsung Electronics Co | Kaufman Et vs. Samsung Electronics Co | Kaufman Et vs. Hyundai Motor | Kaufman Et vs. Toyota Motor Corp |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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