Correlation Between Westlake Chemical and Centerra Gold
Can any of the company-specific risk be diversified away by investing in both Westlake Chemical and Centerra Gold 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 Centerra Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westlake Chemical Partners and Centerra Gold, you can compare the effects of market volatilities on Westlake Chemical and Centerra Gold 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 Centerra Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westlake Chemical and Centerra Gold.
Diversification Opportunities for Westlake Chemical and Centerra Gold
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Westlake and Centerra is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Westlake Chemical Partners and Centerra Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centerra Gold 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 Partners are associated (or correlated) with Centerra Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centerra Gold has no effect on the direction of Westlake Chemical i.e., Westlake Chemical and Centerra Gold go up and down completely randomly.
Pair Corralation between Westlake Chemical and Centerra Gold
Given the investment horizon of 90 days Westlake Chemical is expected to generate 1.03 times less return on investment than Centerra Gold. But when comparing it to its historical volatility, Westlake Chemical Partners is 2.73 times less risky than Centerra Gold. It trades about 0.05 of its potential returns per unit of risk. Centerra Gold is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 594.00 in Centerra Gold on August 26, 2024 and sell it today you would earn a total of 30.00 from holding Centerra Gold or generate 5.05% 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 Partners vs. Centerra Gold
Performance |
| Timeline |
| Westlake Chemical |
| Centerra Gold |
Westlake Chemical and Centerra Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westlake Chemical and Centerra Gold
The main advantage of trading using opposite Westlake Chemical and Centerra Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westlake Chemical position performs unexpectedly, Centerra Gold 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 Centerra Gold will offset losses from the drop in Centerra Gold's long position.| Westlake Chemical vs. Valhi Inc | Westlake Chemical vs. Huntsman | Westlake Chemical vs. Lsb Industries | Westlake Chemical vs. Green Plains Renewable |
| Centerra Gold vs. Gold Fields Ltd | Centerra Gold vs. Eldorado Gold Corp | Centerra Gold vs. Osisko Gold Ro | Centerra Gold vs. SSR Mining |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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