Correlation Between MOTOROLA SOLTN and WESTLAKE CHEMICAL
Can any of the company-specific risk be diversified away by investing in both MOTOROLA SOLTN 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 MOTOROLA SOLTN and WESTLAKE CHEMICAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MOTOROLA SOLTN and WESTLAKE CHEMICAL, you can compare the effects of market volatilities on MOTOROLA SOLTN 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 MOTOROLA SOLTN with a short position of WESTLAKE CHEMICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of MOTOROLA SOLTN and WESTLAKE CHEMICAL.
Diversification Opportunities for MOTOROLA SOLTN and WESTLAKE CHEMICAL
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MOTOROLA and WESTLAKE is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding MOTOROLA SOLTN and WESTLAKE CHEMICAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WESTLAKE CHEMICAL and MOTOROLA SOLTN 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 MOTOROLA SOLTN 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 MOTOROLA SOLTN i.e., MOTOROLA SOLTN and WESTLAKE CHEMICAL go up and down completely randomly.
Pair Corralation between MOTOROLA SOLTN and WESTLAKE CHEMICAL
Assuming the 90 days trading horizon MOTOROLA SOLTN is expected to generate 0.66 times more return on investment than WESTLAKE CHEMICAL. However, MOTOROLA SOLTN is 1.51 times less risky than WESTLAKE CHEMICAL. It trades about 0.12 of its potential returns per unit of risk. WESTLAKE CHEMICAL is currently generating about 0.03 per unit of risk. If you would invest 23,643 in MOTOROLA SOLTN on September 5, 2024 and sell it today you would earn a total of 23,447 from holding MOTOROLA SOLTN or generate 99.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MOTOROLA SOLTN vs. WESTLAKE CHEMICAL
Performance |
| Timeline |
| MOTOROLA SOLTN |
| WESTLAKE CHEMICAL |
MOTOROLA SOLTN and WESTLAKE CHEMICAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MOTOROLA SOLTN and WESTLAKE CHEMICAL
The main advantage of trading using opposite MOTOROLA SOLTN and WESTLAKE CHEMICAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MOTOROLA SOLTN 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.| MOTOROLA SOLTN vs. WESTLAKE CHEMICAL | MOTOROLA SOLTN vs. International Consolidated Airlines | MOTOROLA SOLTN vs. Singapore Airlines Limited | MOTOROLA SOLTN vs. PTT Global Chemical |
| WESTLAKE CHEMICAL vs. TOTAL GABON | WESTLAKE CHEMICAL vs. Walgreens Boots Alliance | WESTLAKE CHEMICAL vs. Peak Resources Limited |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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