Correlation Between WESTLAKE and Flexible Solutions
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By analyzing existing cross correlation between WESTLAKE CHEM P and Flexible Solutions International, you can compare the effects of market volatilities on WESTLAKE and Flexible Solutions 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 with a short position of Flexible Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of WESTLAKE and Flexible Solutions.
Diversification Opportunities for WESTLAKE and Flexible Solutions
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between WESTLAKE and Flexible is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding WESTLAKE CHEM P and Flexible Solutions Internation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flexible Solutions and WESTLAKE 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 CHEM P are associated (or correlated) with Flexible Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flexible Solutions has no effect on the direction of WESTLAKE i.e., WESTLAKE and Flexible Solutions go up and down completely randomly.
Pair Corralation between WESTLAKE and Flexible Solutions
Assuming the 90 days trading horizon WESTLAKE CHEM P is expected to under-perform the Flexible Solutions. But the bond apears to be less risky and, when comparing its historical volatility, WESTLAKE CHEM P is 2.7 times less risky than Flexible Solutions. The bond trades about -0.2 of its potential returns per unit of risk. The Flexible Solutions International is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 342.00 in Flexible Solutions International on August 29, 2024 and sell it today you would earn a total of 59.00 from holding Flexible Solutions International or generate 17.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 59.38% |
| Values | Daily Returns |
WESTLAKE CHEM P vs. Flexible Solutions Internation
Performance |
| Timeline |
| WESTLAKE CHEM P |
| Flexible Solutions |
WESTLAKE and Flexible Solutions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WESTLAKE and Flexible Solutions
The main advantage of trading using opposite WESTLAKE and Flexible Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WESTLAKE position performs unexpectedly, Flexible Solutions 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 Flexible Solutions will offset losses from the drop in Flexible Solutions' long position.The idea behind WESTLAKE CHEM P and Flexible Solutions International pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Flexible Solutions vs. Orion Engineered Carbons | Flexible Solutions vs. International Flavors Fragrances | Flexible Solutions vs. Sociedad Quimica y | Flexible Solutions vs. Albemarle Corp |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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