Correlation Between Capital Drilling and Westlake Chemical
Can any of the company-specific risk be diversified away by investing in both Capital Drilling 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 Capital Drilling and Westlake Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capital Drilling and Westlake Chemical Corp, you can compare the effects of market volatilities on Capital Drilling 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 Capital Drilling with a short position of Westlake Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Drilling and Westlake Chemical.
Diversification Opportunities for Capital Drilling and Westlake Chemical
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Capital and Westlake is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Capital Drilling 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 Capital Drilling 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 Capital Drilling 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 Capital Drilling i.e., Capital Drilling and Westlake Chemical go up and down completely randomly.
Pair Corralation between Capital Drilling and Westlake Chemical
Assuming the 90 days trading horizon Capital Drilling is expected to under-perform the Westlake Chemical. But the stock apears to be less risky and, when comparing its historical volatility, Capital Drilling is 1.06 times less risky than Westlake Chemical. The stock trades about 0.0 of its potential returns per unit of risk. The Westlake Chemical Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 11,227 in Westlake Chemical Corp on September 1, 2024 and sell it today you would earn a total of 1,637 from holding Westlake Chemical Corp or generate 14.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 79.31% |
| Values | Daily Returns |
Capital Drilling vs. Westlake Chemical Corp
Performance |
| Timeline |
| Capital Drilling |
| Westlake Chemical Corp |
Capital Drilling and Westlake Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital Drilling and Westlake Chemical
The main advantage of trading using opposite Capital Drilling and Westlake Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital Drilling 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.| Capital Drilling vs. Zoom Video Communications | Capital Drilling vs. Endo International PLC | Capital Drilling vs. Diversified Energy | Capital Drilling vs. SANTANDER UK 10 |
| Westlake Chemical vs. Empire Metals Limited | Westlake Chemical vs. Silvercorp Metals | Westlake Chemical vs. Gaztransport et Technigaz | Westlake Chemical vs. GreenX Metals |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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