Correlation Between Westlake Chemical and Methanex
Can any of the company-specific risk be diversified away by investing in both Westlake Chemical and Methanex 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 Methanex 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 Methanex, you can compare the effects of market volatilities on Westlake Chemical and Methanex 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 Methanex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westlake Chemical and Methanex.
Diversification Opportunities for Westlake Chemical and Methanex
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Westlake and Methanex is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Westlake Chemical Partners and Methanex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Methanex 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 Methanex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Methanex has no effect on the direction of Westlake Chemical i.e., Westlake Chemical and Methanex go up and down completely randomly.
Pair Corralation between Westlake Chemical and Methanex
Given the investment horizon of 90 days Westlake Chemical is expected to generate 2.47 times less return on investment than Methanex. But when comparing it to its historical volatility, Westlake Chemical Partners is 3.07 times less risky than Methanex. It trades about 0.34 of its potential returns per unit of risk. Methanex is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 4,054 in Methanex on August 23, 2024 and sell it today you would earn a total of 495.00 from holding Methanex or generate 12.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westlake Chemical Partners vs. Methanex
Performance |
| Timeline |
| Westlake Chemical |
| Methanex |
Westlake Chemical and Methanex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westlake Chemical and Methanex
The main advantage of trading using opposite Westlake Chemical and Methanex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westlake Chemical position performs unexpectedly, Methanex 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 Methanex will offset losses from the drop in Methanex's long position.| Westlake Chemical vs. Valhi Inc | Westlake Chemical vs. Huntsman | Westlake Chemical vs. Lsb Industries | Westlake Chemical vs. Green Plains Renewable |
| Methanex vs. AdvanSix | Methanex vs. Lsb Industries | Methanex vs. Green Plains Renewable | Methanex vs. Tronox Holdings PLC |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
Other Complementary Tools
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities |