Correlation Between Westlake Chemical and Quaker Chemical
Can any of the company-specific risk be diversified away by investing in both Westlake Chemical and Quaker Chemical 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 Quaker Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westlake Chemical and Quaker Chemical, you can compare the effects of market volatilities on Westlake Chemical and Quaker Chemical 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 Quaker Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westlake Chemical and Quaker Chemical.
Diversification Opportunities for Westlake Chemical and Quaker Chemical
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Westlake and Quaker is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Westlake Chemical and Quaker Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quaker Chemical 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 Quaker Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quaker Chemical has no effect on the direction of Westlake Chemical i.e., Westlake Chemical and Quaker Chemical go up and down completely randomly.
Pair Corralation between Westlake Chemical and Quaker Chemical
Considering the 90-day investment horizon Westlake Chemical is expected to generate 0.87 times more return on investment than Quaker Chemical. However, Westlake Chemical is 1.14 times less risky than Quaker Chemical. It trades about 0.02 of its potential returns per unit of risk. Quaker Chemical is currently generating about -0.01 per unit of risk. If you would invest 11,993 in Westlake Chemical on August 27, 2024 and sell it today you would earn a total of 1,200 from holding Westlake Chemical or generate 10.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westlake Chemical vs. Quaker Chemical
Performance |
| Timeline |
| Westlake Chemical |
| Quaker Chemical |
Westlake Chemical and Quaker Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westlake Chemical and Quaker Chemical
The main advantage of trading using opposite Westlake Chemical and Quaker Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westlake Chemical position performs unexpectedly, Quaker Chemical 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 Quaker Chemical will offset losses from the drop in Quaker Chemical's long position.| Westlake Chemical vs. Sensient Technologies | Westlake Chemical vs. Innospec | Westlake Chemical vs. Minerals Technologies | Westlake Chemical vs. Oil Dri |
| Quaker Chemical vs. Oil Dri | Quaker Chemical vs. H B Fuller | Quaker Chemical vs. Northern Technologies | Quaker Chemical vs. Cabot |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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