Correlation Between Westlake Chemical and G III
Can any of the company-specific risk be diversified away by investing in both Westlake Chemical and G III 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 G III into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westlake Chemical and G III Apparel Group, you can compare the effects of market volatilities on Westlake Chemical and G III 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 G III. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westlake Chemical and G III.
Diversification Opportunities for Westlake Chemical and G III
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Westlake and GI4 is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Westlake Chemical and G III Apparel Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G III Apparel 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 G III. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G III Apparel has no effect on the direction of Westlake Chemical i.e., Westlake Chemical and G III go up and down completely randomly.
Pair Corralation between Westlake Chemical and G III
Assuming the 90 days horizon Westlake Chemical is expected to under-perform the G III. But the stock apears to be less risky and, when comparing its historical volatility, Westlake Chemical is 2.79 times less risky than G III. The stock trades about -0.03 of its potential returns per unit of risk. The G III Apparel Group is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,380 in G III Apparel Group on September 3, 2024 and sell it today you would earn a total of 420.00 from holding G III Apparel Group or generate 17.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westlake Chemical vs. G III Apparel Group
Performance |
| Timeline |
| Westlake Chemical |
| G III Apparel |
Westlake Chemical and G III Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westlake Chemical and G III
The main advantage of trading using opposite Westlake Chemical and G III positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westlake Chemical position performs unexpectedly, G III 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 G III will offset losses from the drop in G III'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 |
| G III vs. Westlake Chemical | G III vs. SK TELECOM TDADR | G III vs. Gamma Communications plc | G III vs. KINGBOARD CHEMICAL |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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