Correlation Between Westlake Chemical and Amaroq Minerals
Can any of the company-specific risk be diversified away by investing in both Westlake Chemical and Amaroq Minerals 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 Amaroq Minerals 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 Amaroq Minerals, you can compare the effects of market volatilities on Westlake Chemical and Amaroq Minerals 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 Amaroq Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westlake Chemical and Amaroq Minerals.
Diversification Opportunities for Westlake Chemical and Amaroq Minerals
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Westlake and Amaroq is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Westlake Chemical Corp and Amaroq Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amaroq Minerals 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 Amaroq Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amaroq Minerals has no effect on the direction of Westlake Chemical i.e., Westlake Chemical and Amaroq Minerals go up and down completely randomly.
Pair Corralation between Westlake Chemical and Amaroq Minerals
Assuming the 90 days trading horizon Westlake Chemical Corp is expected to under-perform the Amaroq Minerals. But the stock apears to be less risky and, when comparing its historical volatility, Westlake Chemical Corp is 2.56 times less risky than Amaroq Minerals. The stock trades about -0.44 of its potential returns per unit of risk. The Amaroq Minerals is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 8,700 in Amaroq Minerals on October 11, 2024 and sell it today you would earn a total of 1,515 from holding Amaroq Minerals or generate 17.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westlake Chemical Corp vs. Amaroq Minerals
Performance |
| Timeline |
| Westlake Chemical Corp |
| Amaroq Minerals |
Westlake Chemical and Amaroq Minerals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westlake Chemical and Amaroq Minerals
The main advantage of trading using opposite Westlake Chemical and Amaroq Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westlake Chemical position performs unexpectedly, Amaroq Minerals 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 Amaroq Minerals will offset losses from the drop in Amaroq Minerals' 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 |
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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