Correlation Between Westlake Chemical and Orion Engineered
Can any of the company-specific risk be diversified away by investing in both Westlake Chemical and Orion Engineered 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 Orion Engineered into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westlake Chemical and Orion Engineered Carbons, you can compare the effects of market volatilities on Westlake Chemical and Orion Engineered 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 Orion Engineered. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westlake Chemical and Orion Engineered.
Diversification Opportunities for Westlake Chemical and Orion Engineered
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Westlake and Orion is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Westlake Chemical and Orion Engineered Carbons in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orion Engineered Carbons 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 Orion Engineered. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orion Engineered Carbons has no effect on the direction of Westlake Chemical i.e., Westlake Chemical and Orion Engineered go up and down completely randomly.
Pair Corralation between Westlake Chemical and Orion Engineered
Considering the 90-day investment horizon Westlake Chemical is expected to under-perform the Orion Engineered. But the stock apears to be less risky and, when comparing its historical volatility, Westlake Chemical is 2.34 times less risky than Orion Engineered. The stock trades about -0.23 of its potential returns per unit of risk. The Orion Engineered Carbons is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 1,732 in Orion Engineered Carbons on October 31, 2024 and sell it today you would lose (304.00) from holding Orion Engineered Carbons or give up 17.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westlake Chemical vs. Orion Engineered Carbons
Performance |
| Timeline |
| Westlake Chemical |
| Orion Engineered Carbons |
Westlake Chemical and Orion Engineered Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westlake Chemical and Orion Engineered
The main advantage of trading using opposite Westlake Chemical and Orion Engineered positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westlake Chemical position performs unexpectedly, Orion Engineered 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 Orion Engineered will offset losses from the drop in Orion Engineered's long position.| Westlake Chemical vs. Sensient Technologies | Westlake Chemical vs. Innospec | Westlake Chemical vs. Minerals Technologies | Westlake Chemical vs. Oil Dri |
| Orion Engineered vs. Innospec | Orion Engineered vs. H B Fuller | Orion Engineered vs. Quaker Chemical | Orion Engineered vs. Minerals Technologies |
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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