Correlation Between Repsol and WESTLAKE CHEMICAL
Can any of the company-specific risk be diversified away by investing in both Repsol 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 Repsol and WESTLAKE CHEMICAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Repsol and WESTLAKE CHEMICAL, you can compare the effects of market volatilities on Repsol 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 Repsol with a short position of WESTLAKE CHEMICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Repsol and WESTLAKE CHEMICAL.
Diversification Opportunities for Repsol and WESTLAKE CHEMICAL
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Repsol and WESTLAKE is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Repsol and WESTLAKE CHEMICAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WESTLAKE CHEMICAL and Repsol 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 Repsol 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 Repsol i.e., Repsol and WESTLAKE CHEMICAL go up and down completely randomly.
Pair Corralation between Repsol and WESTLAKE CHEMICAL
Assuming the 90 days horizon Repsol is expected to generate 0.68 times more return on investment than WESTLAKE CHEMICAL. However, Repsol is 1.47 times less risky than WESTLAKE CHEMICAL. It trades about -0.07 of its potential returns per unit of risk. WESTLAKE CHEMICAL is currently generating about -0.16 per unit of risk. If you would invest 1,155 in Repsol on September 12, 2024 and sell it today you would lose (19.00) from holding Repsol or give up 1.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Repsol vs. WESTLAKE CHEMICAL
Performance |
| Timeline |
| Repsol |
| WESTLAKE CHEMICAL |
Repsol and WESTLAKE CHEMICAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Repsol and WESTLAKE CHEMICAL
The main advantage of trading using opposite Repsol and WESTLAKE CHEMICAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Repsol 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.| Repsol vs. REVO INSURANCE SPA | Repsol vs. RCM TECHNOLOGIES | Repsol vs. Lion Biotechnologies | Repsol vs. Chiba Bank |
| 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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