Correlation Between WESTLAKE CHEMICAL and NTG Nordic
Can any of the company-specific risk be diversified away by investing in both WESTLAKE CHEMICAL and NTG Nordic 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 NTG Nordic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WESTLAKE CHEMICAL and NTG Nordic Transport, you can compare the effects of market volatilities on WESTLAKE CHEMICAL and NTG Nordic 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 NTG Nordic. Check out your portfolio center. Please also check ongoing floating volatility patterns of WESTLAKE CHEMICAL and NTG Nordic.
Diversification Opportunities for WESTLAKE CHEMICAL and NTG Nordic
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between WESTLAKE and NTG is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding WESTLAKE CHEMICAL and NTG Nordic Transport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NTG Nordic Transport 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 NTG Nordic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NTG Nordic Transport has no effect on the direction of WESTLAKE CHEMICAL i.e., WESTLAKE CHEMICAL and NTG Nordic go up and down completely randomly.
Pair Corralation between WESTLAKE CHEMICAL and NTG Nordic
Assuming the 90 days trading horizon WESTLAKE CHEMICAL is expected to generate 1.26 times more return on investment than NTG Nordic. However, WESTLAKE CHEMICAL is 1.26 times more volatile than NTG Nordic Transport. It trades about 0.01 of its potential returns per unit of risk. NTG Nordic Transport is currently generating about -0.05 per unit of risk. If you would invest 10,700 in WESTLAKE CHEMICAL on November 30, 2024 and sell it today you would earn a total of 0.00 from holding WESTLAKE CHEMICAL or generate 0.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
WESTLAKE CHEMICAL vs. NTG Nordic Transport
Performance |
Timeline |
WESTLAKE CHEMICAL |
NTG Nordic Transport |
WESTLAKE CHEMICAL and NTG Nordic Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with WESTLAKE CHEMICAL and NTG Nordic
The main advantage of trading using opposite WESTLAKE CHEMICAL and NTG Nordic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WESTLAKE CHEMICAL position performs unexpectedly, NTG Nordic 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 NTG Nordic will offset losses from the drop in NTG Nordic's long position.WESTLAKE CHEMICAL vs. CORNISH METALS INC | WESTLAKE CHEMICAL vs. Air Transport Services | WESTLAKE CHEMICAL vs. ADRIATIC METALS LS 013355 | WESTLAKE CHEMICAL vs. LI METAL P |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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