Correlation Between Heavitree Brewery and Westlake Chemical

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

By analyzing existing cross correlation between Heavitree Brewery and Westlake Chemical Corp, you can compare the effects of market volatilities on Heavitree Brewery 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 Heavitree Brewery with a short position of Westlake Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heavitree Brewery and Westlake Chemical.

Diversification Opportunities for Heavitree Brewery and Westlake Chemical

0.72

Correlation Coefficient

Heavitree Brewery  Westlake Chemical

Poor diversification

The 3 months correlation between Heavitree and Westlake is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Heavitree Brewery and Westlake Chemical Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westlake Chemical Corp and Heavitree Brewery 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 Heavitree Brewery 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 Corp has no effect on the direction of Heavitree Brewery i.e., Heavitree Brewery and Westlake Chemical go up and down completely randomly.

Pair Corralation between Heavitree Brewery and Westlake Chemical

Assuming the 90 days trading horizon Heavitree Brewery is expected to under-perform the Westlake Chemical. In addition to that, Heavitree Brewery is 1.97 times more volatile than Westlake Chemical Corp. It trades about -0.09 of its total potential returns per unit of risk. Westlake Chemical Corp is currently generating about -0.09 per unit of volatility. If you would invest  11,497  in Westlake Chemical Corp on December 25, 2024 and sell it today you would lose (1,217) from holding Westlake Chemical Corp or give up 10.59% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Heavitree Brewery  vs.  Westlake Chemical Corp

Heavitree Brewery

Risk-Adjusted Performance

Very Weak

Over the last 90 days Heavitree Brewery 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 technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

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 latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Heavitree Brewery and Westlake Chemical

The main advantage of trading using opposite Heavitree Brewery and Westlake Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heavitree Brewery 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.

The idea behind Heavitree Brewery and Westlake Chemical Corp 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 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..