Correlation Between WESTLAKE CHEMICAL and MOTOROLA SOLTN
Can any of the company-specific risk be diversified away by investing in both WESTLAKE CHEMICAL and MOTOROLA SOLTN 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 MOTOROLA SOLTN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WESTLAKE CHEMICAL and MOTOROLA SOLTN , you can compare the effects of market volatilities on WESTLAKE CHEMICAL and MOTOROLA SOLTN 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 MOTOROLA SOLTN. Check out your portfolio center. Please also check ongoing floating volatility patterns of WESTLAKE CHEMICAL and MOTOROLA SOLTN.
Diversification Opportunities for WESTLAKE CHEMICAL and MOTOROLA SOLTN
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between WESTLAKE and MOTOROLA is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding WESTLAKE CHEMICAL and MOTOROLA SOLTN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MOTOROLA SOLTN 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 MOTOROLA SOLTN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MOTOROLA SOLTN has no effect on the direction of WESTLAKE CHEMICAL i.e., WESTLAKE CHEMICAL and MOTOROLA SOLTN go up and down completely randomly.
Pair Corralation between WESTLAKE CHEMICAL and MOTOROLA SOLTN
Assuming the 90 days trading horizon WESTLAKE CHEMICAL is expected to generate 16.98 times less return on investment than MOTOROLA SOLTN. But when comparing it to its historical volatility, WESTLAKE CHEMICAL is 1.32 times less risky than MOTOROLA SOLTN. It trades about 0.02 of its potential returns per unit of risk. MOTOROLA SOLTN is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 42,150 in MOTOROLA SOLTN on September 5, 2024 and sell it today you would earn a total of 4,940 from holding MOTOROLA SOLTN or generate 11.72% 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. MOTOROLA SOLTN
Performance |
| Timeline |
| WESTLAKE CHEMICAL |
| MOTOROLA SOLTN |
WESTLAKE CHEMICAL and MOTOROLA SOLTN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WESTLAKE CHEMICAL and MOTOROLA SOLTN
The main advantage of trading using opposite WESTLAKE CHEMICAL and MOTOROLA SOLTN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WESTLAKE CHEMICAL position performs unexpectedly, MOTOROLA SOLTN 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 MOTOROLA SOLTN will offset losses from the drop in MOTOROLA SOLTN's long position.| WESTLAKE CHEMICAL vs. TOTAL GABON | WESTLAKE CHEMICAL vs. Walgreens Boots Alliance | WESTLAKE CHEMICAL vs. Peak Resources Limited |
| MOTOROLA SOLTN vs. WESTLAKE CHEMICAL | MOTOROLA SOLTN vs. International Consolidated Airlines | MOTOROLA SOLTN vs. Singapore Airlines Limited | MOTOROLA SOLTN vs. PTT Global 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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