Correlation Between Westlake Chemical and QURATE RETAIL

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

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

Diversification Opportunities for Westlake Chemical and QURATE RETAIL

-0.66

Correlation Coefficient

Westlake Chemical  QURATE RETAIL

Excellent diversification

The 3 months correlation between Westlake and QURATE is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Westlake Chemical and QURATE RETAIL INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QURATE RETAIL 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 are associated (or correlated) with QURATE RETAIL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QURATE RETAIL INC has no effect on the direction of Westlake Chemical i.e., Westlake Chemical and QURATE RETAIL go up and down completely randomly.

Pair Corralation between Westlake Chemical and QURATE RETAIL

Assuming the 90 days horizon Westlake Chemical is expected to generate 0.19 times more return on investment than QURATE RETAIL. However, Westlake Chemical is 5.16 times less risky than QURATE RETAIL. It trades about -0.4 of its potential returns per unit of risk. QURATE RETAIL INC is currently generating about -0.1 per unit of risk. If you would invest  10,749  in Westlake Chemical on December 30, 2024 and sell it today you would lose (1,599) from holding Westlake Chemical or give up 14.88% of portfolio value over 90 days.

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

Westlake Chemical  vs.  QURATE RETAIL INC

Westlake Chemical

Risk-Adjusted Performance

Very Weak

Over the last 90 days Westlake Chemical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

QURATE RETAIL INC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in QURATE RETAIL INC are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, QURATE RETAIL reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Westlake Chemical and QURATE RETAIL

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

The idea behind Westlake Chemical and QURATE RETAIL INC 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.

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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.