Correlation Between PICKN PAY and WESTLAKE CHEMICAL
Can any of the company-specific risk be diversified away by investing in both PICKN PAY 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 PICKN PAY and WESTLAKE CHEMICAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PICKN PAY STORES and WESTLAKE CHEMICAL, you can compare the effects of market volatilities on PICKN PAY 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 PICKN PAY with a short position of WESTLAKE CHEMICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of PICKN PAY and WESTLAKE CHEMICAL.
Diversification Opportunities for PICKN PAY and WESTLAKE CHEMICAL
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between PICKN and WESTLAKE is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding PICKN PAY STORES and WESTLAKE CHEMICAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WESTLAKE CHEMICAL and PICKN PAY 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 PICKN PAY STORES 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 PICKN PAY i.e., PICKN PAY and WESTLAKE CHEMICAL go up and down completely randomly.
Pair Corralation between PICKN PAY and WESTLAKE CHEMICAL
Assuming the 90 days trading horizon PICKN PAY STORES is expected to generate 2.19 times more return on investment than WESTLAKE CHEMICAL. However, PICKN PAY is 2.19 times more volatile than WESTLAKE CHEMICAL. It trades about 0.2 of its potential returns per unit of risk. WESTLAKE CHEMICAL is currently generating about -0.06 per unit of risk. If you would invest 111.00 in PICKN PAY STORES on September 12, 2024 and sell it today you would earn a total of 46.00 from holding PICKN PAY STORES or generate 41.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PICKN PAY STORES vs. WESTLAKE CHEMICAL
Performance |
| Timeline |
| PICKN PAY STORES |
| WESTLAKE CHEMICAL |
PICKN PAY and WESTLAKE CHEMICAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PICKN PAY and WESTLAKE CHEMICAL
The main advantage of trading using opposite PICKN PAY and WESTLAKE CHEMICAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PICKN PAY 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.The idea behind PICKN PAY STORES and WESTLAKE CHEMICAL pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| WESTLAKE CHEMICAL vs. Apple Inc | WESTLAKE CHEMICAL vs. Apple Inc | WESTLAKE CHEMICAL vs. Apple Inc | WESTLAKE CHEMICAL vs. Apple Inc |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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