Correlation Between Oil Dri and Westlake Chemical
Can any of the company-specific risk be diversified away by investing in both Oil Dri 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 Oil Dri and Westlake Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oil Dri and Westlake Chemical, you can compare the effects of market volatilities on Oil Dri 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 Oil Dri with a short position of Westlake Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oil Dri and Westlake Chemical.
Diversification Opportunities for Oil Dri and Westlake Chemical
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Oil and Westlake is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Oil Dri and Westlake Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westlake Chemical and Oil Dri 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 Oil Dri 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 Oil Dri i.e., Oil Dri and Westlake Chemical go up and down completely randomly.
Pair Corralation between Oil Dri and Westlake Chemical
Considering the 90-day investment horizon Oil Dri is expected to generate 1.5 times more return on investment than Westlake Chemical. However, Oil Dri is 1.5 times more volatile than Westlake Chemical. It trades about 0.05 of its potential returns per unit of risk. Westlake Chemical is currently generating about -0.04 per unit of risk. If you would invest 6,861 in Oil Dri on August 27, 2024 and sell it today you would earn a total of 119.00 from holding Oil Dri or generate 1.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Oil Dri vs. Westlake Chemical
Performance |
| Timeline |
| Oil Dri |
| Westlake Chemical |
Oil Dri and Westlake Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oil Dri and Westlake Chemical
The main advantage of trading using opposite Oil Dri and Westlake Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oil Dri 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.| Oil Dri vs. H B Fuller | Oil Dri vs. Minerals Technologies | Oil Dri vs. Quaker Chemical | Oil Dri vs. Sensient Technologies |
| Westlake Chemical vs. Sensient Technologies | Westlake Chemical vs. Innospec | Westlake Chemical vs. Minerals Technologies | Westlake Chemical vs. Oil Dri |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
Other Complementary Tools
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format |