Correlation Between WESTLAKE and BCB Bancorp

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Can any of the company-specific risk be diversified away by investing in both WESTLAKE and BCB Bancorp 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 and BCB Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WESTLAKE CHEM P and BCB Bancorp, you can compare the effects of market volatilities on WESTLAKE and BCB Bancorp 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 BCB Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of WESTLAKE and BCB Bancorp.

Diversification Opportunities for WESTLAKE and BCB Bancorp

0.14
  Correlation Coefficient

Average diversification

The 3 months correlation between WESTLAKE and BCB is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding WESTLAKE CHEM P and BCB Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BCB Bancorp 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 BCB Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BCB Bancorp has no effect on the direction of WESTLAKE i.e., WESTLAKE and BCB Bancorp go up and down completely randomly.

Pair Corralation between WESTLAKE and BCB Bancorp

Assuming the 90 days trading horizon WESTLAKE CHEM P is expected to generate 0.38 times more return on investment than BCB Bancorp. However, WESTLAKE CHEM P is 2.66 times less risky than BCB Bancorp. It trades about -0.19 of its potential returns per unit of risk. BCB Bancorp is currently generating about -0.24 per unit of risk. If you would invest  9,823  in WESTLAKE CHEM P on November 29, 2024 and sell it today you would lose (379.00) from holding WESTLAKE CHEM P or give up 3.86% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

WESTLAKE CHEM P  vs.  BCB Bancorp

 Performance 
       Timeline  
WESTLAKE CHEM P 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days WESTLAKE CHEM P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, WESTLAKE is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
BCB Bancorp 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days BCB Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Stock's fundamental drivers remain relatively invariable which may send shares a bit higher in March 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

WESTLAKE and BCB Bancorp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with WESTLAKE and BCB Bancorp

The main advantage of trading using opposite WESTLAKE and BCB Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WESTLAKE position performs unexpectedly, BCB Bancorp 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 BCB Bancorp will offset losses from the drop in BCB Bancorp's long position.
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The idea behind WESTLAKE CHEM P and BCB Bancorp 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.
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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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.

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