Correlation Between Retail Estates and WESTLAKE CHEMICAL
Can any of the company-specific risk be diversified away by investing in both Retail Estates 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 Retail Estates and WESTLAKE CHEMICAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Retail Estates NV and WESTLAKE CHEMICAL, you can compare the effects of market volatilities on Retail Estates 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 Retail Estates with a short position of WESTLAKE CHEMICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Retail Estates and WESTLAKE CHEMICAL.
Diversification Opportunities for Retail Estates and WESTLAKE CHEMICAL
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Retail and WESTLAKE is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Retail Estates NV and WESTLAKE CHEMICAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WESTLAKE CHEMICAL and Retail Estates 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 Retail Estates NV 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 Retail Estates i.e., Retail Estates and WESTLAKE CHEMICAL go up and down completely randomly.
Pair Corralation between Retail Estates and WESTLAKE CHEMICAL
Assuming the 90 days horizon Retail Estates is expected to generate 1.18 times less return on investment than WESTLAKE CHEMICAL. But when comparing it to its historical volatility, Retail Estates NV is 1.34 times less risky than WESTLAKE CHEMICAL. It trades about 0.03 of its potential returns per unit of risk. WESTLAKE CHEMICAL is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 10,088 in WESTLAKE CHEMICAL on September 4, 2024 and sell it today you would earn a total of 2,112 from holding WESTLAKE CHEMICAL or generate 20.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Retail Estates NV vs. WESTLAKE CHEMICAL
Performance |
| Timeline |
| Retail Estates NV |
| WESTLAKE CHEMICAL |
Retail Estates and WESTLAKE CHEMICAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Retail Estates and WESTLAKE CHEMICAL
The main advantage of trading using opposite Retail Estates and WESTLAKE CHEMICAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Retail Estates 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.| Retail Estates vs. FRACTAL GAMING GROUP | Retail Estates vs. TROPHY GAMES DEV | Retail Estates vs. FEMALE HEALTH | Retail Estates vs. GAMESTOP |
| WESTLAKE CHEMICAL vs. Insurance Australia Group | WESTLAKE CHEMICAL vs. SBI Insurance Group | WESTLAKE CHEMICAL vs. Singapore Reinsurance | WESTLAKE CHEMICAL vs. British American Tobacco |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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