Correlation Between Westlake Chemical and First
Can any of the company-specific risk be diversified away by investing in both Westlake Chemical and First 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 First 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 First Class Metals, you can compare the effects of market volatilities on Westlake Chemical and First 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 First. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westlake Chemical and First.
Diversification Opportunities for Westlake Chemical and First
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Westlake and First is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Westlake Chemical Corp and First Class Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Class Metals 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 First. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Class Metals has no effect on the direction of Westlake Chemical i.e., Westlake Chemical and First go up and down completely randomly.
Pair Corralation between Westlake Chemical and First
Assuming the 90 days trading horizon Westlake Chemical Corp is expected to generate 0.4 times more return on investment than First. However, Westlake Chemical Corp is 2.51 times less risky than First. It trades about 0.14 of its potential returns per unit of risk. First Class Metals is currently generating about 0.02 per unit of risk. If you would invest 11,486 in Westlake Chemical Corp on October 24, 2024 and sell it today you would earn a total of 433.00 from holding Westlake Chemical Corp or generate 3.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Westlake Chemical Corp vs. First Class Metals
Performance |
| Timeline |
| Westlake Chemical Corp |
| First Class Metals |
Westlake Chemical and First Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westlake Chemical and First
The main advantage of trading using opposite Westlake Chemical and First positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westlake Chemical position performs unexpectedly, First 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 First will offset losses from the drop in First's long position.| Westlake Chemical vs. Hecla Mining Co | Westlake Chemical vs. Beowulf Mining | Westlake Chemical vs. McEwen Mining | Westlake Chemical vs. Bisichi Mining PLC |
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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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