Correlation Between WESTLAKE CHEMICAL and Repsol
Can any of the company-specific risk be diversified away by investing in both WESTLAKE CHEMICAL and Repsol 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 Repsol into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WESTLAKE CHEMICAL and Repsol, you can compare the effects of market volatilities on WESTLAKE CHEMICAL and Repsol 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 Repsol. Check out your portfolio center. Please also check ongoing floating volatility patterns of WESTLAKE CHEMICAL and Repsol.
Diversification Opportunities for WESTLAKE CHEMICAL and Repsol
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between WESTLAKE and Repsol is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding WESTLAKE CHEMICAL and Repsol in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Repsol 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 Repsol. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Repsol has no effect on the direction of WESTLAKE CHEMICAL i.e., WESTLAKE CHEMICAL and Repsol go up and down completely randomly.
Pair Corralation between WESTLAKE CHEMICAL and Repsol
Assuming the 90 days trading horizon WESTLAKE CHEMICAL is expected to generate 1.15 times more return on investment than Repsol. However, WESTLAKE CHEMICAL is 1.15 times more volatile than Repsol. It trades about 0.01 of its potential returns per unit of risk. Repsol is currently generating about -0.02 per unit of risk. If you would invest 11,814 in WESTLAKE CHEMICAL on September 4, 2024 and sell it today you would earn a total of 286.00 from holding WESTLAKE CHEMICAL or generate 2.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
WESTLAKE CHEMICAL vs. Repsol
Performance |
| Timeline |
| WESTLAKE CHEMICAL |
| Repsol |
WESTLAKE CHEMICAL and Repsol Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WESTLAKE CHEMICAL and Repsol
The main advantage of trading using opposite WESTLAKE CHEMICAL and Repsol positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WESTLAKE CHEMICAL position performs unexpectedly, Repsol 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 Repsol will offset losses from the drop in Repsol'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 |
| Repsol vs. WESTLAKE CHEMICAL | Repsol vs. NH HOTEL GROUP | Repsol vs. Sanyo Chemical Industries | Repsol vs. Eastman 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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