Correlation Between Westlake Chemical and Monster Beverage
Can any of the company-specific risk be diversified away by investing in both Westlake Chemical and Monster Beverage 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 Monster Beverage 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 Monster Beverage Corp, you can compare the effects of market volatilities on Westlake Chemical and Monster Beverage 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 Monster Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westlake Chemical and Monster Beverage.
Diversification Opportunities for Westlake Chemical and Monster Beverage
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Westlake and Monster is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Westlake Chemical Corp and Monster Beverage Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monster Beverage Corp 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 Monster Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monster Beverage Corp has no effect on the direction of Westlake Chemical i.e., Westlake Chemical and Monster Beverage go up and down completely randomly.
Pair Corralation between Westlake Chemical and Monster Beverage
Assuming the 90 days trading horizon Westlake Chemical Corp is expected to under-perform the Monster Beverage. In addition to that, Westlake Chemical is 1.52 times more volatile than Monster Beverage Corp. It trades about -0.44 of its total potential returns per unit of risk. Monster Beverage Corp is currently generating about -0.21 per unit of volatility. If you would invest 5,320 in Monster Beverage Corp on October 11, 2024 and sell it today you would lose (178.00) from holding Monster Beverage Corp or give up 3.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westlake Chemical Corp vs. Monster Beverage Corp
Performance |
| Timeline |
| Westlake Chemical Corp |
| Monster Beverage Corp |
Westlake Chemical and Monster Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westlake Chemical and Monster Beverage
The main advantage of trading using opposite Westlake Chemical and Monster Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westlake Chemical position performs unexpectedly, Monster Beverage 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 Monster Beverage will offset losses from the drop in Monster Beverage's long position.| Westlake Chemical vs. Scandic Hotels Group | Westlake Chemical vs. SBM Offshore NV | Westlake Chemical vs. New Residential Investment | Westlake Chemical vs. InterContinental Hotels Group |
| Monster Beverage vs. BlackRock Frontiers Investment | Monster Beverage vs. Jupiter Green Investment | Monster Beverage vs. Cairo Communication SpA | Monster Beverage vs. Chrysalis Investments |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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