Correlation Between Westlake Chemical and Univar
Can any of the company-specific risk be diversified away by investing in both Westlake Chemical and Univar 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 Univar 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 Univar Inc, you can compare the effects of market volatilities on Westlake Chemical and Univar 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 Univar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westlake Chemical and Univar.
Diversification Opportunities for Westlake Chemical and Univar
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Westlake and Univar is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Westlake Chemical Partners and Univar Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Univar Inc 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 Univar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Univar Inc has no effect on the direction of Westlake Chemical i.e., Westlake Chemical and Univar go up and down completely randomly.
Pair Corralation between Westlake Chemical and Univar
Given the investment horizon of 90 days Westlake Chemical is expected to generate 1.02 times less return on investment than Univar. But when comparing it to its historical volatility, Westlake Chemical Partners is 1.47 times less risky than Univar. It trades about 0.04 of its potential returns per unit of risk. Univar Inc is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 3,486 in Univar Inc on August 27, 2024 and sell it today you would earn a total of 107.00 from holding Univar Inc or generate 3.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 25.49% |
| Values | Daily Returns |
Westlake Chemical Partners vs. Univar Inc
Performance |
| Timeline |
| Westlake Chemical |
| Univar Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Westlake Chemical and Univar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westlake Chemical and Univar
The main advantage of trading using opposite Westlake Chemical and Univar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westlake Chemical position performs unexpectedly, Univar 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 Univar will offset losses from the drop in Univar's long position.| Westlake Chemical vs. Huntsman | Westlake Chemical vs. AdvanSix | Westlake Chemical vs. Celanese | Westlake Chemical vs. Green Plains Renewable |
| Univar vs. Valhi Inc | Univar vs. Huntsman | Univar vs. Lsb Industries | Univar vs. Westlake Chemical Partners |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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