Correlation Between WT OFFSHORE and LyondellBasell Industries
Can any of the company-specific risk be diversified away by investing in both WT OFFSHORE and LyondellBasell Industries 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 WT OFFSHORE and LyondellBasell Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WT OFFSHORE and LyondellBasell Industries NV, you can compare the effects of market volatilities on WT OFFSHORE and LyondellBasell Industries 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 WT OFFSHORE with a short position of LyondellBasell Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of WT OFFSHORE and LyondellBasell Industries.
Diversification Opportunities for WT OFFSHORE and LyondellBasell Industries
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between UWV and LyondellBasell is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding WT OFFSHORE and LyondellBasell Industries NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LyondellBasell Industries and WT OFFSHORE 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 WT OFFSHORE are associated (or correlated) with LyondellBasell Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LyondellBasell Industries has no effect on the direction of WT OFFSHORE i.e., WT OFFSHORE and LyondellBasell Industries go up and down completely randomly.
Pair Corralation between WT OFFSHORE and LyondellBasell Industries
Assuming the 90 days trading horizon WT OFFSHORE is expected to under-perform the LyondellBasell Industries. In addition to that, WT OFFSHORE is 2.06 times more volatile than LyondellBasell Industries NV. It trades about -0.06 of its total potential returns per unit of risk. LyondellBasell Industries NV is currently generating about 0.01 per unit of volatility. If you would invest 6,911 in LyondellBasell Industries NV on September 14, 2024 and sell it today you would earn a total of 333.00 from holding LyondellBasell Industries NV or generate 4.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
WT OFFSHORE vs. LyondellBasell Industries NV
Performance |
| Timeline |
| WT OFFSHORE |
| LyondellBasell Industries |
WT OFFSHORE and LyondellBasell Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WT OFFSHORE and LyondellBasell Industries
The main advantage of trading using opposite WT OFFSHORE and LyondellBasell Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WT OFFSHORE position performs unexpectedly, LyondellBasell Industries 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 LyondellBasell Industries will offset losses from the drop in LyondellBasell Industries' long position.| WT OFFSHORE vs. Apple Inc | WT OFFSHORE vs. Apple Inc | WT OFFSHORE vs. Apple Inc | WT OFFSHORE vs. Apple Inc |
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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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