Correlation Between Westlake Chemical and Dupont De
Can any of the company-specific risk be diversified away by investing in both Westlake Chemical and Dupont De 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 Dupont De into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westlake Chemical and Dupont De Nemours, you can compare the effects of market volatilities on Westlake Chemical and Dupont De 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 Dupont De. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westlake Chemical and Dupont De.
Diversification Opportunities for Westlake Chemical and Dupont De
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Westlake and Dupont is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Westlake Chemical and Dupont De Nemours in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dupont De Nemours 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 Dupont De. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dupont De Nemours has no effect on the direction of Westlake Chemical i.e., Westlake Chemical and Dupont De go up and down completely randomly.
Pair Corralation between Westlake Chemical and Dupont De
Assuming the 90 days horizon Westlake Chemical is expected to generate 1.01 times less return on investment than Dupont De. In addition to that, Westlake Chemical is 1.11 times more volatile than Dupont De Nemours. It trades about 0.03 of its total potential returns per unit of risk. Dupont De Nemours is currently generating about 0.04 per unit of volatility. If you would invest 6,375 in Dupont De Nemours on September 4, 2024 and sell it today you would earn a total of 1,536 from holding Dupont De Nemours or generate 24.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westlake Chemical vs. Dupont De Nemours
Performance |
| Timeline |
| Westlake Chemical |
| Dupont De Nemours |
Westlake Chemical and Dupont De Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westlake Chemical and Dupont De
The main advantage of trading using opposite Westlake Chemical and Dupont De positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westlake Chemical position performs unexpectedly, Dupont De 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 Dupont De will offset losses from the drop in Dupont De's long position.| Westlake Chemical vs. The Sherwin Williams | Westlake Chemical vs. Dupont De Nemours | Westlake Chemical vs. Superior Plus Corp | Westlake Chemical vs. NMI Holdings |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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