Correlation Between Westlake Chemical and SEB SA
Can any of the company-specific risk be diversified away by investing in both Westlake Chemical and SEB SA 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 SEB SA 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 SEB SA, you can compare the effects of market volatilities on Westlake Chemical and SEB SA 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 SEB SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westlake Chemical and SEB SA.
Diversification Opportunities for Westlake Chemical and SEB SA
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Westlake and SEB is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Westlake Chemical Corp and SEB SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEB SA 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 SEB SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEB SA has no effect on the direction of Westlake Chemical i.e., Westlake Chemical and SEB SA go up and down completely randomly.
Pair Corralation between Westlake Chemical and SEB SA
Assuming the 90 days trading horizon Westlake Chemical Corp is expected to generate 1.26 times more return on investment than SEB SA. However, Westlake Chemical is 1.26 times more volatile than SEB SA. It trades about 0.04 of its potential returns per unit of risk. SEB SA is currently generating about 0.02 per unit of risk. If you would invest 9,864 in Westlake Chemical Corp on September 3, 2024 and sell it today you would earn a total of 3,000 from holding Westlake Chemical Corp or generate 30.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 76.51% |
| Values | Daily Returns |
Westlake Chemical Corp vs. SEB SA
Performance |
| Timeline |
| Westlake Chemical Corp |
| SEB SA |
Westlake Chemical and SEB SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westlake Chemical and SEB SA
The main advantage of trading using opposite Westlake Chemical and SEB SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westlake Chemical position performs unexpectedly, SEB SA 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 SEB SA will offset losses from the drop in SEB SA's long position.| Westlake Chemical vs. Qurate Retail Series | Westlake Chemical vs. JB Hunt Transport | Westlake Chemical vs. Coor Service Management | Westlake Chemical vs. Roebuck Food Group |
| SEB SA vs. MyHealthChecked Plc | SEB SA vs. Playtech Plc | SEB SA vs. Charter Communications Cl | SEB SA vs. Induction Healthcare Group |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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