Correlation Between AdvanSix and Westlake Chemical
Can any of the company-specific risk be diversified away by investing in both AdvanSix 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 AdvanSix and Westlake Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AdvanSix and Westlake Chemical Partners, you can compare the effects of market volatilities on AdvanSix 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 AdvanSix with a short position of Westlake Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of AdvanSix and Westlake Chemical.
Diversification Opportunities for AdvanSix and Westlake Chemical
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between AdvanSix and Westlake is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding AdvanSix and Westlake Chemical Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westlake Chemical and AdvanSix 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 AdvanSix 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 AdvanSix i.e., AdvanSix and Westlake Chemical go up and down completely randomly.
Pair Corralation between AdvanSix and Westlake Chemical
Given the investment horizon of 90 days AdvanSix is expected to generate 3.59 times more return on investment than Westlake Chemical. However, AdvanSix is 3.59 times more volatile than Westlake Chemical Partners. It trades about 0.14 of its potential returns per unit of risk. Westlake Chemical Partners is currently generating about 0.34 per unit of risk. If you would invest 2,910 in AdvanSix on August 23, 2024 and sell it today you would earn a total of 200.00 from holding AdvanSix or generate 6.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AdvanSix vs. Westlake Chemical Partners
Performance |
| Timeline |
| AdvanSix |
| Westlake Chemical |
AdvanSix and Westlake Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AdvanSix and Westlake Chemical
The main advantage of trading using opposite AdvanSix and Westlake Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AdvanSix 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.| AdvanSix vs. Methanex | AdvanSix vs. Lsb Industries | AdvanSix vs. Green Plains Renewable | AdvanSix vs. Tronox Holdings PLC |
| Westlake Chemical vs. Valhi Inc | Westlake Chemical vs. Huntsman | Westlake Chemical vs. Lsb Industries | Westlake Chemical vs. Green Plains Renewable |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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