Correlation Between WESTLAKE CHEMICAL and X FAB
Can any of the company-specific risk be diversified away by investing in both WESTLAKE CHEMICAL and X FAB 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 X FAB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WESTLAKE CHEMICAL and X FAB Silicon Foundries, you can compare the effects of market volatilities on WESTLAKE CHEMICAL and X FAB 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 X FAB. Check out your portfolio center. Please also check ongoing floating volatility patterns of WESTLAKE CHEMICAL and X FAB.
Diversification Opportunities for WESTLAKE CHEMICAL and X FAB
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between WESTLAKE and XFB is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding WESTLAKE CHEMICAL and X FAB Silicon Foundries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on X FAB Silicon 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 X FAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of X FAB Silicon has no effect on the direction of WESTLAKE CHEMICAL i.e., WESTLAKE CHEMICAL and X FAB go up and down completely randomly.
Pair Corralation between WESTLAKE CHEMICAL and X FAB
Assuming the 90 days trading horizon WESTLAKE CHEMICAL is expected to generate 0.73 times more return on investment than X FAB. However, WESTLAKE CHEMICAL is 1.38 times less risky than X FAB. It trades about 0.03 of its potential returns per unit of risk. X FAB Silicon Foundries is currently generating about -0.02 per unit of risk. If you would invest 10,088 in WESTLAKE CHEMICAL on September 4, 2024 and sell it today you would earn a total of 2,112 from holding WESTLAKE CHEMICAL or generate 20.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
WESTLAKE CHEMICAL vs. X FAB Silicon Foundries
Performance |
| Timeline |
| WESTLAKE CHEMICAL |
| X FAB Silicon |
WESTLAKE CHEMICAL and X FAB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WESTLAKE CHEMICAL and X FAB
The main advantage of trading using opposite WESTLAKE CHEMICAL and X FAB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WESTLAKE CHEMICAL position performs unexpectedly, X FAB 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 X FAB will offset losses from the drop in X FAB'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 |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
Other Complementary Tools
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world |