Correlation Between Scandic Hotels and Westlake Chemical
Can any of the company-specific risk be diversified away by investing in both Scandic Hotels and Westlake Chemical 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 Scandic Hotels and Westlake Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Scandic Hotels Group and Westlake Chemical Corp, you can compare the effects of market volatilities on Scandic Hotels and Westlake Chemical 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 Scandic Hotels with a short position of Westlake Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scandic Hotels and Westlake Chemical.
Diversification Opportunities for Scandic Hotels and Westlake Chemical
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Scandic and Westlake is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Scandic Hotels Group and Westlake Chemical Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westlake Chemical Corp and Scandic Hotels 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 Scandic Hotels Group are associated (or correlated) with Westlake Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westlake Chemical Corp has no effect on the direction of Scandic Hotels i.e., Scandic Hotels and Westlake Chemical go up and down completely randomly.
Pair Corralation between Scandic Hotels and Westlake Chemical
Assuming the 90 days trading horizon Scandic Hotels Group is expected to generate 1.09 times more return on investment than Westlake Chemical. However, Scandic Hotels is 1.09 times more volatile than Westlake Chemical Corp. It trades about 0.07 of its potential returns per unit of risk. Westlake Chemical Corp is currently generating about -0.43 per unit of risk. If you would invest 6,589 in Scandic Hotels Group on October 11, 2024 and sell it today you would earn a total of 114.00 from holding Scandic Hotels Group or generate 1.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Scandic Hotels Group vs. Westlake Chemical Corp
Performance |
| Timeline |
| Scandic Hotels Group |
| Westlake Chemical Corp |
Scandic Hotels and Westlake Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scandic Hotels and Westlake Chemical
The main advantage of trading using opposite Scandic Hotels and Westlake Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scandic Hotels position performs unexpectedly, Westlake Chemical 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 Westlake Chemical will offset losses from the drop in Westlake Chemical's long position.| Scandic Hotels vs. Empire Metals Limited | Scandic Hotels vs. Various Eateries PLC | Scandic Hotels vs. Morgan Advanced Materials | Scandic Hotels vs. Vulcan Materials Co |
| Westlake Chemical vs. Scandic Hotels Group | Westlake Chemical vs. SBM Offshore NV | Westlake Chemical vs. New Residential Investment | Westlake Chemical vs. InterContinental Hotels 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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