Correlation Between NioCorp Developments and Westlake Chemical
Can any of the company-specific risk be diversified away by investing in both NioCorp Developments 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 NioCorp Developments and Westlake Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NioCorp Developments Ltd and Westlake Chemical Partners, you can compare the effects of market volatilities on NioCorp Developments 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 NioCorp Developments with a short position of Westlake Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of NioCorp Developments and Westlake Chemical.
Diversification Opportunities for NioCorp Developments and Westlake Chemical
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NioCorp and Westlake is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding NioCorp Developments Ltd and Westlake Chemical Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westlake Chemical and NioCorp Developments 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 NioCorp Developments Ltd 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 NioCorp Developments i.e., NioCorp Developments and Westlake Chemical go up and down completely randomly.
Pair Corralation between NioCorp Developments and Westlake Chemical
Allowing for the 90-day total investment horizon NioCorp Developments Ltd is expected to under-perform the Westlake Chemical. In addition to that, NioCorp Developments is 6.0 times more volatile than Westlake Chemical Partners. It trades about -0.43 of its total potential returns per unit of risk. Westlake Chemical Partners is currently generating about 0.54 per unit of volatility. If you would invest 2,198 in Westlake Chemical Partners on August 30, 2024 and sell it today you would earn a total of 174.00 from holding Westlake Chemical Partners or generate 7.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
NioCorp Developments Ltd vs. Westlake Chemical Partners
Performance |
| Timeline |
| NioCorp Developments |
| Westlake Chemical |
NioCorp Developments and Westlake Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NioCorp Developments and Westlake Chemical
The main advantage of trading using opposite NioCorp Developments and Westlake Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NioCorp Developments 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.| NioCorp Developments vs. Lithium Americas Corp | NioCorp Developments vs. Caterpillar | NioCorp Developments vs. Exxon Mobil Corp | NioCorp Developments vs. Cisco Systems |
| 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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