Correlation Between Westlake Chemical and PayPal Holdings
Can any of the company-specific risk be diversified away by investing in both Westlake Chemical and PayPal Holdings 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 Westlake Chemical and PayPal Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westlake Chemical and PayPal Holdings, you can compare the effects of market volatilities on Westlake Chemical and PayPal Holdings 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 Westlake Chemical with a short position of PayPal Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westlake Chemical and PayPal Holdings.
Diversification Opportunities for Westlake Chemical and PayPal Holdings
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Westlake and PayPal is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Westlake Chemical and PayPal Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PayPal Holdings and Westlake Chemical 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 Westlake Chemical are associated (or correlated) with PayPal Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PayPal Holdings has no effect on the direction of Westlake Chemical i.e., Westlake Chemical and PayPal Holdings go up and down completely randomly.
Pair Corralation between Westlake Chemical and PayPal Holdings
Assuming the 90 days horizon Westlake Chemical is expected to generate 4.13 times less return on investment than PayPal Holdings. But when comparing it to its historical volatility, Westlake Chemical is 1.29 times less risky than PayPal Holdings. It trades about 0.01 of its potential returns per unit of risk. PayPal Holdings is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 6,646 in PayPal Holdings on September 12, 2024 and sell it today you would earn a total of 1,884 from holding PayPal Holdings or generate 28.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.72% |
| Values | Daily Returns |
Westlake Chemical vs. PayPal Holdings
Performance |
| Timeline |
| Westlake Chemical |
| PayPal Holdings |
Westlake Chemical and PayPal Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westlake Chemical and PayPal Holdings
The main advantage of trading using opposite Westlake Chemical and PayPal Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westlake Chemical position performs unexpectedly, PayPal Holdings 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 PayPal Holdings will offset losses from the drop in PayPal Holdings' long position.| Westlake Chemical vs. Albemarle | Westlake Chemical vs. Superior Plus Corp | Westlake Chemical vs. SIVERS SEMICONDUCTORS AB | Westlake Chemical vs. Norsk Hydro ASA |
| PayPal Holdings vs. Coeur Mining | PayPal Holdings vs. Media and Games | PayPal Holdings vs. MINCO SILVER | PayPal Holdings vs. CI GAMES SA |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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