Correlation Between Eco Animal and Westlake Chemical
Can any of the company-specific risk be diversified away by investing in both Eco Animal 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 Eco Animal and Westlake Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eco Animal Health and Westlake Chemical Corp, you can compare the effects of market volatilities on Eco Animal 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 Eco Animal with a short position of Westlake Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eco Animal and Westlake Chemical.
Diversification Opportunities for Eco Animal and Westlake Chemical
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Eco and Westlake is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Eco Animal Health 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 Eco Animal 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 Eco Animal Health 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 Eco Animal i.e., Eco Animal and Westlake Chemical go up and down completely randomly.
Pair Corralation between Eco Animal and Westlake Chemical
Assuming the 90 days trading horizon Eco Animal Health is expected to generate 1.05 times more return on investment than Westlake Chemical. However, Eco Animal is 1.05 times more volatile than Westlake Chemical Corp. It trades about -0.11 of its potential returns per unit of risk. Westlake Chemical Corp is currently generating about -0.39 per unit of risk. If you would invest 7,050 in Eco Animal Health on October 12, 2024 and sell it today you would lose (200.00) from holding Eco Animal Health or give up 2.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eco Animal Health vs. Westlake Chemical Corp
Performance |
| Timeline |
| Eco Animal Health |
| Westlake Chemical Corp |
Eco Animal and Westlake Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eco Animal and Westlake Chemical
The main advantage of trading using opposite Eco Animal and Westlake Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eco Animal 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.| Eco Animal vs. Pets at Home | Eco Animal vs. Home Depot | Eco Animal vs. bet at home AG | Eco Animal vs. Wheaton Precious Metals |
| Westlake Chemical vs. Auction Technology Group | Westlake Chemical vs. DXC Technology Co | Westlake Chemical vs. Optima Health plc | Westlake Chemical vs. Eco Animal Health |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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