Correlation Between Linde Plc and Westlake Chemical
Can any of the company-specific risk be diversified away by investing in both Linde Plc and Westlake Chemical 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 Linde Plc and Westlake Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Linde plc Ordinary and Westlake Chemical, you can compare the effects of market volatilities on Linde Plc and Westlake Chemical 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 Linde Plc with a short position of Westlake Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Linde Plc and Westlake Chemical.
Diversification Opportunities for Linde Plc and Westlake Chemical
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Linde and Westlake is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Linde plc Ordinary and Westlake Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westlake Chemical and Linde Plc 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 Linde plc Ordinary are associated (or correlated) with Westlake Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westlake Chemical has no effect on the direction of Linde Plc i.e., Linde Plc and Westlake Chemical go up and down completely randomly.
Pair Corralation between Linde Plc and Westlake Chemical
Considering the 90-day investment horizon Linde plc Ordinary is expected to under-perform the Westlake Chemical. But the stock apears to be less risky and, when comparing its historical volatility, Linde plc Ordinary is 1.49 times less risky than Westlake Chemical. The stock trades about -0.12 of its potential returns per unit of risk. The Westlake Chemical is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 14,215 in Westlake Chemical on March 7, 2024 and sell it today you would earn a total of 1,436 from holding Westlake Chemical or generate 10.1% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Linde plc Ordinary vs. Westlake Chemical
Performance |
Timeline |
Linde plc Ordinary |
Westlake Chemical |
Linde Plc and Westlake Chemical Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Linde Plc and Westlake Chemical
The main advantage of trading using opposite Linde Plc and Westlake Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Linde Plc position performs unexpectedly, Westlake Chemical 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 Westlake Chemical will offset losses from the drop in Westlake Chemical's long position.Linde Plc vs. ABIVAX Socit Anonyme | Linde Plc vs. Morningstar Unconstrained Allocation | Linde Plc vs. Bondbloxx ETF Trust | Linde Plc vs. LG Display Co |
Westlake Chemical vs. ABIVAX Socit Anonyme | Westlake Chemical vs. Morningstar Unconstrained Allocation | Westlake Chemical vs. Bondbloxx ETF Trust | Westlake Chemical vs. LG Display Co |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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