Correlation Between Westlake Chemical and E I
Can any of the company-specific risk be diversified away by investing in both Westlake Chemical and E I 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 E I 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 E I du, you can compare the effects of market volatilities on Westlake Chemical and E I 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 E I. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westlake Chemical and E I.
Diversification Opportunities for Westlake Chemical and E I
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Westlake and CTA-PA is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Westlake Chemical Partners and E I du in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on E I du 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 E I. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of E I du has no effect on the direction of Westlake Chemical i.e., Westlake Chemical and E I go up and down completely randomly.
Pair Corralation between Westlake Chemical and E I
Given the investment horizon of 90 days Westlake Chemical Partners is expected to generate 0.35 times more return on investment than E I. However, Westlake Chemical Partners is 2.89 times less risky than E I. It trades about 0.54 of its potential returns per unit of risk. E I du is currently generating about -0.01 per unit of risk. If you would invest 2,198 in Westlake Chemical Partners on August 30, 2024 and sell it today you would earn a total of 174.00 from holding Westlake Chemical Partners or generate 7.92% 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. E I du
Performance |
| Timeline |
| Westlake Chemical |
| E I du |
Westlake Chemical and E I Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westlake Chemical and E I
The main advantage of trading using opposite Westlake Chemical and E I positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westlake Chemical position performs unexpectedly, E I 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 E I will offset losses from the drop in E I's long position.| Westlake Chemical vs. Valhi Inc | Westlake Chemical vs. Huntsman | Westlake Chemical vs. Lsb Industries | Westlake Chemical vs. Green Plains Renewable |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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