Correlation Between Westlake Chemical and Capital Drilling
Can any of the company-specific risk be diversified away by investing in both Westlake Chemical and Capital Drilling 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 Capital Drilling 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 Capital Drilling, you can compare the effects of market volatilities on Westlake Chemical and Capital Drilling 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 Capital Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westlake Chemical and Capital Drilling.
Diversification Opportunities for Westlake Chemical and Capital Drilling
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Westlake and Capital is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Westlake Chemical Corp and Capital Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Drilling 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 Capital Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Drilling has no effect on the direction of Westlake Chemical i.e., Westlake Chemical and Capital Drilling go up and down completely randomly.
Pair Corralation between Westlake Chemical and Capital Drilling
Assuming the 90 days trading horizon Westlake Chemical Corp is expected to generate 0.76 times more return on investment than Capital Drilling. However, Westlake Chemical Corp is 1.32 times less risky than Capital Drilling. It trades about -0.04 of its potential returns per unit of risk. Capital Drilling is currently generating about -0.04 per unit of risk. If you would invest 13,100 in Westlake Chemical Corp on September 1, 2024 and sell it today you would lose (236.00) from holding Westlake Chemical Corp or give up 1.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Westlake Chemical Corp vs. Capital Drilling
Performance |
| Timeline |
| Westlake Chemical Corp |
| Capital Drilling |
Westlake Chemical and Capital Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westlake Chemical and Capital Drilling
The main advantage of trading using opposite Westlake Chemical and Capital Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westlake Chemical position performs unexpectedly, Capital Drilling 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 Capital Drilling will offset losses from the drop in Capital Drilling'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 |
| Capital Drilling vs. Zoom Video Communications | Capital Drilling vs. Endo International PLC | Capital Drilling vs. Diversified Energy | Capital Drilling vs. SANTANDER UK 10 |
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 Valuation module to check real value of public entities based on technical and fundamental data.
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