Correlation Between Superior Plus and Westlake Chemical
Can any of the company-specific risk be diversified away by investing in both Superior Plus 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 Superior Plus and Westlake Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Superior Plus Corp and Westlake Chemical, you can compare the effects of market volatilities on Superior Plus 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 Superior Plus with a short position of Westlake Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Superior Plus and Westlake Chemical.
Diversification Opportunities for Superior Plus and Westlake Chemical
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Superior and Westlake is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Superior Plus Corp and Westlake Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westlake Chemical and Superior Plus 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 Superior Plus Corp 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 has no effect on the direction of Superior Plus i.e., Superior Plus and Westlake Chemical go up and down completely randomly.
Pair Corralation between Superior Plus and Westlake Chemical
Assuming the 90 days horizon Superior Plus Corp is expected to under-perform the Westlake Chemical. In addition to that, Superior Plus is 1.2 times more volatile than Westlake Chemical. It trades about -0.02 of its total potential returns per unit of risk. Westlake Chemical is currently generating about 0.03 per unit of volatility. If you would invest 10,086 in Westlake Chemical on September 3, 2024 and sell it today you would earn a total of 2,014 from holding Westlake Chemical or generate 19.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Superior Plus Corp vs. Westlake Chemical
Performance |
| Timeline |
| Superior Plus Corp |
| Westlake Chemical |
Superior Plus and Westlake Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Superior Plus and Westlake Chemical
The main advantage of trading using opposite Superior Plus and Westlake Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Superior Plus 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.| Superior Plus vs. Collins Foods Limited | Superior Plus vs. Thai Beverage Public | Superior Plus vs. ADRIATIC METALS LS 013355 | Superior Plus vs. Lifeway Foods |
| Westlake Chemical vs. The Sherwin Williams | Westlake Chemical vs. Dupont De Nemours | Westlake Chemical vs. Superior Plus Corp | Westlake Chemical vs. NMI Holdings |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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