Correlation Between Westlake Chemical and Hawkins
Can any of the company-specific risk be diversified away by investing in both Westlake Chemical and Hawkins 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 Hawkins into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westlake Chemical and Hawkins, you can compare the effects of market volatilities on Westlake Chemical and Hawkins 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 Hawkins. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westlake Chemical and Hawkins.
Diversification Opportunities for Westlake Chemical and Hawkins
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Westlake and Hawkins is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Westlake Chemical and Hawkins in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hawkins 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 Hawkins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hawkins has no effect on the direction of Westlake Chemical i.e., Westlake Chemical and Hawkins go up and down completely randomly.
Pair Corralation between Westlake Chemical and Hawkins
Considering the 90-day investment horizon Westlake Chemical is expected to under-perform the Hawkins. But the stock apears to be less risky and, when comparing its historical volatility, Westlake Chemical is 2.38 times less risky than Hawkins. The stock trades about -0.57 of its potential returns per unit of risk. The Hawkins is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 13,003 in Hawkins on September 23, 2024 and sell it today you would lose (605.00) from holding Hawkins or give up 4.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westlake Chemical vs. Hawkins
Performance |
| Timeline |
| Westlake Chemical |
| Hawkins |
Westlake Chemical and Hawkins Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westlake Chemical and Hawkins
The main advantage of trading using opposite Westlake Chemical and Hawkins positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westlake Chemical position performs unexpectedly, Hawkins 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 Hawkins will offset losses from the drop in Hawkins' long position.| Westlake Chemical vs. International Flavors Fragrances | Westlake Chemical vs. Cabot | Westlake Chemical vs. Air Products and | Westlake Chemical vs. Linde plc Ordinary |
| Hawkins vs. International Flavors Fragrances | Hawkins vs. Cabot | Hawkins vs. Westlake Chemical | Hawkins vs. Air Products and |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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