Correlation Between Westlake Chemical and ALERION CLEANPOWER
Can any of the company-specific risk be diversified away by investing in both Westlake Chemical and ALERION CLEANPOWER 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 ALERION CLEANPOWER into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westlake Chemical and ALERION CLEANPOWER, you can compare the effects of market volatilities on Westlake Chemical and ALERION CLEANPOWER 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 ALERION CLEANPOWER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westlake Chemical and ALERION CLEANPOWER.
Diversification Opportunities for Westlake Chemical and ALERION CLEANPOWER
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Westlake and ALERION is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Westlake Chemical and ALERION CLEANPOWER in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALERION CLEANPOWER 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 ALERION CLEANPOWER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALERION CLEANPOWER has no effect on the direction of Westlake Chemical i.e., Westlake Chemical and ALERION CLEANPOWER go up and down completely randomly.
Pair Corralation between Westlake Chemical and ALERION CLEANPOWER
Assuming the 90 days horizon Westlake Chemical is expected to generate 1.11 times more return on investment than ALERION CLEANPOWER. However, Westlake Chemical is 1.11 times more volatile than ALERION CLEANPOWER. It trades about -0.13 of its potential returns per unit of risk. ALERION CLEANPOWER is currently generating about -0.3 per unit of risk. If you would invest 11,100 in Westlake Chemical on November 28, 2024 and sell it today you would lose (500.00) from holding Westlake Chemical or give up 4.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westlake Chemical vs. ALERION CLEANPOWER
Performance |
| Timeline |
| Westlake Chemical |
| ALERION CLEANPOWER |
Westlake Chemical and ALERION CLEANPOWER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westlake Chemical and ALERION CLEANPOWER
The main advantage of trading using opposite Westlake Chemical and ALERION CLEANPOWER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westlake Chemical position performs unexpectedly, ALERION CLEANPOWER 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 ALERION CLEANPOWER will offset losses from the drop in ALERION CLEANPOWER's long position.| Westlake Chemical vs. Dairy Farm International | Westlake Chemical vs. TRI CHEMICAL LABORATINC | Westlake Chemical vs. SEKISUI CHEMICAL | Westlake Chemical vs. DAIRY FARM INTL |
| ALERION CLEANPOWER vs. REINET INVESTMENTS SCA | ALERION CLEANPOWER vs. PennantPark Investment | ALERION CLEANPOWER vs. Computer And Technologies | ALERION CLEANPOWER vs. ASM Pacific Technology |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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