Correlation Between WESTLAKE CHEMICAL and Burlington Stores
Can any of the company-specific risk be diversified away by investing in both WESTLAKE CHEMICAL and Burlington Stores 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 Burlington Stores into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WESTLAKE CHEMICAL and Burlington Stores, you can compare the effects of market volatilities on WESTLAKE CHEMICAL and Burlington Stores 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 Burlington Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of WESTLAKE CHEMICAL and Burlington Stores.
Diversification Opportunities for WESTLAKE CHEMICAL and Burlington Stores
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between WESTLAKE and Burlington is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding WESTLAKE CHEMICAL and Burlington Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Burlington Stores 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 Burlington Stores. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Burlington Stores has no effect on the direction of WESTLAKE CHEMICAL i.e., WESTLAKE CHEMICAL and Burlington Stores go up and down completely randomly.
Pair Corralation between WESTLAKE CHEMICAL and Burlington Stores
Assuming the 90 days trading horizon WESTLAKE CHEMICAL is expected to generate 1.87 times less return on investment than Burlington Stores. But when comparing it to its historical volatility, WESTLAKE CHEMICAL is 1.31 times less risky than Burlington Stores. It trades about 0.03 of its potential returns per unit of risk. Burlington Stores is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 18,500 in Burlington Stores on September 4, 2024 and sell it today you would earn a total of 8,300 from holding Burlington Stores or generate 44.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
WESTLAKE CHEMICAL vs. Burlington Stores
Performance |
| Timeline |
| WESTLAKE CHEMICAL |
| Burlington Stores |
WESTLAKE CHEMICAL and Burlington Stores Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WESTLAKE CHEMICAL and Burlington Stores
The main advantage of trading using opposite WESTLAKE CHEMICAL and Burlington Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WESTLAKE CHEMICAL position performs unexpectedly, Burlington Stores 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 Burlington Stores will offset losses from the drop in Burlington Stores' long position.| WESTLAKE CHEMICAL vs. Insurance Australia Group | WESTLAKE CHEMICAL vs. SBI Insurance Group | WESTLAKE CHEMICAL vs. Singapore Reinsurance | WESTLAKE CHEMICAL vs. British American Tobacco |
| Burlington Stores vs. Apple Inc | Burlington Stores vs. Apple Inc | Burlington Stores vs. Apple Inc | Burlington Stores 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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