Correlation Between Check Point and Westlake Chemical
Can any of the company-specific risk be diversified away by investing in both Check Point 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 Check Point and Westlake Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Check Point Software and Westlake Chemical Corp, you can compare the effects of market volatilities on Check Point 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 Check Point with a short position of Westlake Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Check Point and Westlake Chemical.
Diversification Opportunities for Check Point and Westlake Chemical
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Check and Westlake is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software 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 Check Point 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 Check Point Software 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 Check Point i.e., Check Point and Westlake Chemical go up and down completely randomly.
Pair Corralation between Check Point and Westlake Chemical
Assuming the 90 days trading horizon Check Point Software is expected to generate 0.83 times more return on investment than Westlake Chemical. However, Check Point Software is 1.21 times less risky than Westlake Chemical. It trades about 0.19 of its potential returns per unit of risk. Westlake Chemical Corp is currently generating about 0.03 per unit of risk. If you would invest 21,472 in Check Point Software on December 11, 2024 and sell it today you would earn a total of 1,097 from holding Check Point Software or generate 5.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Check Point Software vs. Westlake Chemical Corp
Performance |
| Timeline |
| Check Point Software |
| Westlake Chemical Corp |
Check Point and Westlake Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Check Point and Westlake Chemical
The main advantage of trading using opposite Check Point and Westlake Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Check Point 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.| Check Point vs. Lindsell Train Investment | Check Point vs. Intuitive Investments Group | Check Point vs. Scottish American Investment | Check Point vs. PureTech Health plc |
| Westlake Chemical vs. Eastinco Mining Exploration | Westlake Chemical vs. Associated British Foods | Westlake Chemical vs. Silvercorp Metals | Westlake Chemical vs. Blackrock World Mining |
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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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