Correlation Between Foresight Environmental and Westlake Chemical
Can any of the company-specific risk be diversified away by investing in both Foresight Environmental 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 Foresight Environmental and Westlake Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Foresight Environmental Infrastructure and Westlake Chemical Corp, you can compare the effects of market volatilities on Foresight Environmental 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 Foresight Environmental with a short position of Westlake Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Foresight Environmental and Westlake Chemical.
Diversification Opportunities for Foresight Environmental and Westlake Chemical
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Foresight and Westlake is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Foresight Environmental Infras 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 Foresight Environmental 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 Foresight Environmental Infrastructure 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 Foresight Environmental i.e., Foresight Environmental and Westlake Chemical go up and down completely randomly.
Pair Corralation between Foresight Environmental and Westlake Chemical
Assuming the 90 days trading horizon Foresight Environmental Infrastructure is expected to under-perform the Westlake Chemical. But the stock apears to be less risky and, when comparing its historical volatility, Foresight Environmental Infrastructure is 1.3 times less risky than Westlake Chemical. The stock trades about -0.18 of its potential returns per unit of risk. The Westlake Chemical Corp is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest 12,770 in Westlake Chemical Corp on September 14, 2024 and sell it today you would lose (637.00) from holding Westlake Chemical Corp or give up 4.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Foresight Environmental Infras vs. Westlake Chemical Corp
Performance |
| Timeline |
| Foresight Environmental |
| Westlake Chemical Corp |
Foresight Environmental and Westlake Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Foresight Environmental and Westlake Chemical
The main advantage of trading using opposite Foresight Environmental and Westlake Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Foresight Environmental 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.| Foresight Environmental vs. CATCo Reinsurance Opportunities | Foresight Environmental vs. BH Macro Limited | Foresight Environmental vs. Legal General Group | Foresight Environmental vs. TMT Investments PLC |
| Westlake Chemical vs. Orient Telecoms | Westlake Chemical vs. Foresight Environmental Infrastructure | Westlake Chemical vs. Zegona Communications Plc | Westlake Chemical vs. Roadside Real Estate |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios |