Correlation Between Litigation Capital and Westlake Chemical
Can any of the company-specific risk be diversified away by investing in both Litigation Capital 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 Litigation Capital and Westlake Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Litigation Capital Management and Westlake Chemical Corp, you can compare the effects of market volatilities on Litigation Capital 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 Litigation Capital with a short position of Westlake Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Litigation Capital and Westlake Chemical.
Diversification Opportunities for Litigation Capital and Westlake Chemical
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Litigation and Westlake is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Litigation Capital Management 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 Litigation Capital 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 Litigation Capital Management 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 Litigation Capital i.e., Litigation Capital and Westlake Chemical go up and down completely randomly.
Pair Corralation between Litigation Capital and Westlake Chemical
Assuming the 90 days trading horizon Litigation Capital Management is expected to generate 1.49 times more return on investment than Westlake Chemical. However, Litigation Capital is 1.49 times more volatile than Westlake Chemical Corp. It trades about 0.07 of its potential returns per unit of risk. Westlake Chemical Corp is currently generating about -0.08 per unit of risk. If you would invest 9,589 in Litigation Capital Management on September 12, 2024 and sell it today you would earn a total of 961.00 from holding Litigation Capital Management or generate 10.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 96.92% |
| Values | Daily Returns |
Litigation Capital Management vs. Westlake Chemical Corp
Performance |
| Timeline |
| Litigation Capital |
| Westlake Chemical Corp |
Litigation Capital and Westlake Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Litigation Capital and Westlake Chemical
The main advantage of trading using opposite Litigation Capital and Westlake Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Litigation Capital 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.| Litigation Capital vs. Intuitive Investments Group | Litigation Capital vs. Universal Display Corp | Litigation Capital vs. Batm Advanced Communications | Litigation Capital vs. Arrow Electronics |
| Westlake Chemical vs. Samsung Electronics Co | Westlake Chemical vs. Samsung Electronics Co | Westlake Chemical vs. Hyundai Motor | Westlake Chemical vs. Reliance Industries Ltd |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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