Correlation Between Green Plains and Westlake Chemical
Can any of the company-specific risk be diversified away by investing in both Green Plains 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 Green Plains and Westlake Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Green Plains Renewable and Westlake Chemical Partners, you can compare the effects of market volatilities on Green Plains 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 Green Plains with a short position of Westlake Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Green Plains and Westlake Chemical.
Diversification Opportunities for Green Plains and Westlake Chemical
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Green and Westlake is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Green Plains Renewable and Westlake Chemical Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westlake Chemical and Green Plains 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 Green Plains Renewable 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 Green Plains i.e., Green Plains and Westlake Chemical go up and down completely randomly.
Pair Corralation between Green Plains and Westlake Chemical
Given the investment horizon of 90 days Green Plains Renewable is expected to under-perform the Westlake Chemical. In addition to that, Green Plains is 3.59 times more volatile than Westlake Chemical Partners. It trades about -0.08 of its total potential returns per unit of risk. Westlake Chemical Partners is currently generating about 0.05 per unit of volatility. If you would invest 2,083 in Westlake Chemical Partners on August 26, 2024 and sell it today you would earn a total of 254.00 from holding Westlake Chemical Partners or generate 12.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Green Plains Renewable vs. Westlake Chemical Partners
Performance |
| Timeline |
| Green Plains Renewable |
| Westlake Chemical |
Green Plains and Westlake Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Green Plains and Westlake Chemical
The main advantage of trading using opposite Green Plains and Westlake Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Green Plains 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.| Green Plains vs. Lsb Industries | Green Plains vs. AdvanSix | Green Plains vs. Tronox Holdings PLC | Green Plains vs. Methanex |
| 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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