Correlation Between WESTLAKE CHEMICAL and COSTCO WHOLESALE
Can any of the company-specific risk be diversified away by investing in both WESTLAKE CHEMICAL and COSTCO WHOLESALE 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 COSTCO WHOLESALE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WESTLAKE CHEMICAL and COSTCO WHOLESALE CDR, you can compare the effects of market volatilities on WESTLAKE CHEMICAL and COSTCO WHOLESALE 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 COSTCO WHOLESALE. Check out your portfolio center. Please also check ongoing floating volatility patterns of WESTLAKE CHEMICAL and COSTCO WHOLESALE.
Diversification Opportunities for WESTLAKE CHEMICAL and COSTCO WHOLESALE
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between WESTLAKE and COSTCO is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding WESTLAKE CHEMICAL and COSTCO WHOLESALE CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COSTCO WHOLESALE CDR 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 COSTCO WHOLESALE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COSTCO WHOLESALE CDR has no effect on the direction of WESTLAKE CHEMICAL i.e., WESTLAKE CHEMICAL and COSTCO WHOLESALE go up and down completely randomly.
Pair Corralation between WESTLAKE CHEMICAL and COSTCO WHOLESALE
Assuming the 90 days trading horizon WESTLAKE CHEMICAL is expected to generate 2.77 times less return on investment than COSTCO WHOLESALE. In addition to that, WESTLAKE CHEMICAL is 1.12 times more volatile than COSTCO WHOLESALE CDR. It trades about 0.03 of its total potential returns per unit of risk. COSTCO WHOLESALE CDR is currently generating about 0.09 per unit of volatility. If you would invest 1,506 in COSTCO WHOLESALE CDR on September 4, 2024 and sell it today you would earn a total of 1,454 from holding COSTCO WHOLESALE CDR or generate 96.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
WESTLAKE CHEMICAL vs. COSTCO WHOLESALE CDR
Performance |
| Timeline |
| WESTLAKE CHEMICAL |
| COSTCO WHOLESALE CDR |
WESTLAKE CHEMICAL and COSTCO WHOLESALE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WESTLAKE CHEMICAL and COSTCO WHOLESALE
The main advantage of trading using opposite WESTLAKE CHEMICAL and COSTCO WHOLESALE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WESTLAKE CHEMICAL position performs unexpectedly, COSTCO WHOLESALE 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 COSTCO WHOLESALE will offset losses from the drop in COSTCO WHOLESALE's 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 |
| COSTCO WHOLESALE vs. Walmart | COSTCO WHOLESALE vs. Superior Plus Corp | COSTCO WHOLESALE vs. NMI Holdings | COSTCO WHOLESALE vs. Origin Agritech |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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