Correlation Between Westlake Chemical and Alliance Data
Can any of the company-specific risk be diversified away by investing in both Westlake Chemical and Alliance Data 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 Alliance Data 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 Alliance Data Systems, you can compare the effects of market volatilities on Westlake Chemical and Alliance Data 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 Alliance Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westlake Chemical and Alliance Data.
Diversification Opportunities for Westlake Chemical and Alliance Data
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Westlake and Alliance is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Westlake Chemical Corp and Alliance Data Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alliance Data Systems 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 Alliance Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alliance Data Systems has no effect on the direction of Westlake Chemical i.e., Westlake Chemical and Alliance Data go up and down completely randomly.
Pair Corralation between Westlake Chemical and Alliance Data
Assuming the 90 days trading horizon Westlake Chemical Corp is expected to under-perform the Alliance Data. But the stock apears to be less risky and, when comparing its historical volatility, Westlake Chemical Corp is 2.64 times less risky than Alliance Data. The stock trades about -0.04 of its potential returns per unit of risk. The Alliance Data Systems is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 5,008 in Alliance Data Systems on September 1, 2024 and sell it today you would earn a total of 892.00 from holding Alliance Data Systems or generate 17.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westlake Chemical Corp vs. Alliance Data Systems
Performance |
| Timeline |
| Westlake Chemical Corp |
| Alliance Data Systems |
Westlake Chemical and Alliance Data Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westlake Chemical and Alliance Data
The main advantage of trading using opposite Westlake Chemical and Alliance Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westlake Chemical position performs unexpectedly, Alliance Data 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 Alliance Data will offset losses from the drop in Alliance Data's long position.| Westlake Chemical vs. Empire Metals Limited | Westlake Chemical vs. Silvercorp Metals | Westlake Chemical vs. Gaztransport et Technigaz | Westlake Chemical vs. GreenX Metals |
| Alliance Data vs. Infrastrutture Wireless Italiane | Alliance Data vs. Monster Beverage Corp | Alliance Data vs. Molson Coors Beverage | Alliance Data vs. Take Two Interactive Software |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
Other Complementary Tools
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings |