Correlation Between Westlake Chemical and National Beverage
Can any of the company-specific risk be diversified away by investing in both Westlake Chemical and National 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 National 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 National Beverage Corp, you can compare the effects of market volatilities on Westlake Chemical and National 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 National Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westlake Chemical and National Beverage.
Diversification Opportunities for Westlake Chemical and National Beverage
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Westlake and National is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Westlake Chemical Corp and National Beverage Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National 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 National Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Beverage Corp has no effect on the direction of Westlake Chemical i.e., Westlake Chemical and National Beverage go up and down completely randomly.
Pair Corralation between Westlake Chemical and National Beverage
Assuming the 90 days trading horizon Westlake Chemical is expected to generate 3.09 times less return on investment than National Beverage. But when comparing it to its historical volatility, Westlake Chemical Corp is 1.72 times less risky than National Beverage. It trades about 0.01 of its potential returns per unit of risk. National Beverage Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 4,419 in National Beverage Corp on October 27, 2024 and sell it today you would lose (212.00) from holding National Beverage Corp or give up 4.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 85.93% |
| Values | Daily Returns |
Westlake Chemical Corp vs. National Beverage Corp
Performance |
| Timeline |
| Westlake Chemical Corp |
| National Beverage Corp |
Westlake Chemical and National Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westlake Chemical and National Beverage
The main advantage of trading using opposite Westlake Chemical and National Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westlake Chemical position performs unexpectedly, National 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 National Beverage will offset losses from the drop in National Beverage's long position.| Westlake Chemical vs. Fevertree Drinks Plc | Westlake Chemical vs. Eco Animal Health | Westlake Chemical vs. Cardinal Health | Westlake Chemical vs. Planet Fitness Cl |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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