Correlation Between Lsb Industries and Westlake Chemical
Can any of the company-specific risk be diversified away by investing in both Lsb Industries 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 Lsb Industries and Westlake Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lsb Industries and Westlake Chemical Partners, you can compare the effects of market volatilities on Lsb Industries 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 Lsb Industries with a short position of Westlake Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lsb Industries and Westlake Chemical.
Diversification Opportunities for Lsb Industries and Westlake Chemical
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Lsb and Westlake is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Lsb Industries and Westlake Chemical Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westlake Chemical and Lsb Industries 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 Lsb Industries 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 Lsb Industries i.e., Lsb Industries and Westlake Chemical go up and down completely randomly.
Pair Corralation between Lsb Industries and Westlake Chemical
Considering the 90-day investment horizon Lsb Industries is expected to generate 9.47 times more return on investment than Westlake Chemical. However, Lsb Industries is 9.47 times more volatile than Westlake Chemical Partners. It trades about 0.12 of its potential returns per unit of risk. Westlake Chemical Partners is currently generating about 0.54 per unit of risk. If you would invest 770.00 in Lsb Industries on November 2, 2024 and sell it today you would earn a total of 82.00 from holding Lsb Industries or generate 10.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lsb Industries vs. Westlake Chemical Partners
Performance |
| Timeline |
| Lsb Industries |
| Westlake Chemical |
Lsb Industries and Westlake Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lsb Industries and Westlake Chemical
The main advantage of trading using opposite Lsb Industries and Westlake Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lsb Industries 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.| Lsb Industries vs. Green Plains Renewable | Lsb Industries vs. AdvanSix | Lsb Industries vs. Tronox Holdings PLC | Lsb Industries 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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