Correlation Between Westlake Chemical and RPM International
Can any of the company-specific risk be diversified away by investing in both Westlake Chemical and RPM International 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 RPM International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westlake Chemical and RPM International, you can compare the effects of market volatilities on Westlake Chemical and RPM International 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 RPM International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westlake Chemical and RPM International.
Diversification Opportunities for Westlake Chemical and RPM International
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Westlake and RPM is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Westlake Chemical and RPM International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RPM International 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 RPM International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RPM International has no effect on the direction of Westlake Chemical i.e., Westlake Chemical and RPM International go up and down completely randomly.
Pair Corralation between Westlake Chemical and RPM International
Considering the 90-day investment horizon Westlake Chemical is expected to under-perform the RPM International. In addition to that, Westlake Chemical is 1.11 times more volatile than RPM International. It trades about -0.08 of its total potential returns per unit of risk. RPM International is currently generating about 0.25 per unit of volatility. If you would invest 12,945 in RPM International on August 27, 2024 and sell it today you would earn a total of 842.00 from holding RPM International or generate 6.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westlake Chemical vs. RPM International
Performance |
| Timeline |
| Westlake Chemical |
| RPM International |
Westlake Chemical and RPM International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westlake Chemical and RPM International
The main advantage of trading using opposite Westlake Chemical and RPM International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westlake Chemical position performs unexpectedly, RPM International 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 RPM International will offset losses from the drop in RPM International's long position.| Westlake Chemical vs. Sensient Technologies | Westlake Chemical vs. Innospec | Westlake Chemical vs. Minerals Technologies | Westlake Chemical vs. Oil Dri |
| RPM International vs. Oil Dri | RPM International vs. H B Fuller | RPM International vs. Northern Technologies | RPM International 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity |