Correlation Between Westlake Chemical and Sabre Insurance

Can any of the company-specific risk be diversified away by investing in both Westlake Chemical and Sabre Insurance 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 Sabre Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Westlake Chemical Corp and Sabre Insurance Group, you can compare the effects of market volatilities on Westlake Chemical and Sabre Insurance 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 Sabre Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westlake Chemical and Sabre Insurance.

Diversification Opportunities for Westlake Chemical and Sabre Insurance

0.13

Correlation Coefficient

Westlake Chemical  Sabre Insurance

Average diversification

The 3 months correlation between Westlake and Sabre is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Westlake Chemical Corp and Sabre Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sabre Insurance Group 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 Corp are associated (or correlated) with Sabre Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sabre Insurance Group has no effect on the direction of Westlake Chemical i.e., Westlake Chemical and Sabre Insurance go up and down completely randomly.

Pair Corralation between Westlake Chemical and Sabre Insurance

Assuming the 90 days trading horizon Westlake Chemical Corp is expected to generate 1.74 times more return on investment than Sabre Insurance. However, Westlake Chemical is 1.74 times more volatile than Sabre Insurance Group. It trades about -0.06 of its potential returns per unit of risk. Sabre Insurance Group is currently generating about -0.14 per unit of risk. If you would invest  11,418  in Westlake Chemical Corp on December 2, 2024 and sell it today you would lose (286.00) from holding Westlake Chemical Corp or give up 2.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Westlake Chemical Corp  vs.  Sabre Insurance Group

Westlake Chemical Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Westlake Chemical Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Sabre Insurance Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sabre Insurance Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Sabre Insurance is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Westlake Chemical and Sabre Insurance

The main advantage of trading using opposite Westlake Chemical and Sabre Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westlake Chemical position performs unexpectedly, Sabre Insurance 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 Sabre Insurance will offset losses from the drop in Sabre Insurance's long position.

The idea behind Westlake Chemical Corp and Sabre Insurance Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.