Westlake Chemical Stock Volatility
| WLK Stock | USD 148.94 0.35 0.24% |
We consider Westlake Chemical very steady. Westlake Chemical shows Sharpe Ratio of 0.0676, which attests that the company had a 0.0676% return per unit of risk over the last 3 months. We have found twenty-nine technical indicators for Westlake Chemical, which you can use to evaluate the volatility of the company. Please check out Westlake Chemical's Downside Deviation of 2.03, market risk adjusted performance of 0.1076, and Mean Deviation of 1.32 to validate if the risk estimate we provide is consistent with the expected return of 0.12%. Key indicators related to Westlake Chemical's volatility include:
30 Days Market Risk | Chance Of Distress | 30 Days Economic Sensitivity |
Westlake Chemical Stock volatility depicts how high the prices fluctuate around the mean (or its average) price. In other words, it is a statistical measure of the distribution of Westlake daily returns, and it is calculated using variance and standard deviation. We also use Westlake's beta, its sensitivity to the market, as well as its odds of financial distress to provide a more practical estimation of Westlake Chemical volatility.
Westlake |
ESG Sustainability
While most ESG disclosures are voluntary, Westlake Chemical's sustainability indicators can be used to identify proper investment strategies using environmental, social, and governance scores that are crucial to Westlake Chemical's managers and investors.Environment Score | Governance Score | Social Score |
Since volatility provides investors with entry points to take advantage of stock prices, companies, such as Westlake Chemical can benefit from it. Downward market volatility can be a perfect environment for investors who play the long game. Here, they may decide to buy additional stocks of Westlake Chemical at lower prices. For example, an investor can purchase Westlake stock that has halved in price over a short period. This will lower your average cost per share, thereby improving your portfolio's performance when the markets normalize. Similarly, when the prices of Westlake Chemical's stock rises, investors can sell out and invest the proceeds in other equities with better opportunities. Investing when markets are volatile with better valuations will accord both investors and companies the opportunity to generate better long-term returns.
Moving together with Westlake Stock
| 0.69 | DD | Dupont De Nemours Report 7th of May 2024 | PairCorr |
| 0.9 | FF | FutureFuel Corp | PairCorr |
| 0.8 | ECVT | Ecovyst Financial Report 2nd of May 2024 | PairCorr |
| 0.76 | WTTR | Select Energy Services Financial Report 7th of May 2024 | PairCorr |
Westlake Chemical Market Sensitivity And Downside Risk
Westlake Chemical's beta coefficient measures the volatility of Westlake stock compared to the systematic risk of the entire market represented by your selected benchmark. In mathematical terms, beta represents the slope of the line through a regression of data points where each of these points represents Westlake stock's returns against your selected market. In other words, Westlake Chemical's beta of 1.65 provides an investor with an approximation of how much risk Westlake Chemical stock can potentially add to one of your existing portfolios. Westlake Chemical currently demonstrates below-average downside deviation. It has Information Ratio of 0.06 and Jensen Alpha of 0.06. Understanding different market volatility trends often help investors to time the market. Properly using volatility indicators enable traders to measure Westlake Chemical's stock risk against market volatility during both bullish and bearish trends. The higher level of volatility that comes with bear markets can directly impact Westlake Chemical's stock price while adding stress to investors as they watch their shares' value plummet. This usually forces investors to rebalance their portfolios by buying different financial instruments as prices fall.
3 Months Beta |Analyze Westlake Chemical Demand TrendCheck current 90 days Westlake Chemical correlation with market (NYSE Composite)Westlake Beta |
Westlake standard deviation measures the daily dispersion of prices over your selected time horizon relative to its mean. A typical volatile entity has a high standard deviation, while the deviation of a stable instrument is usually low. As a downside, the standard deviation calculates all uncertainty as risk, even when it is in your favor, such as above-average returns.
Standard Deviation | 1.83 |
It is essential to understand the difference between upside risk (as represented by Westlake Chemical's standard deviation) and the downside risk, which can be measured by semi-deviation or downside deviation of Westlake Chemical's daily returns or price. Since the actual investment returns on holding a position in westlake stock tend to have a non-normal distribution, there will be different probabilities for losses than for gains. The likelihood of losses is reflected in the downside risk of an investment in Westlake Chemical.
Using Westlake Put Option to Manage Risk
Put options written on Westlake Chemical grant holders of the option the right to sell a specified amount of Westlake Chemical at a specified price within a specified time frame. The put buyer has a limited loss and, while not fully unlimited gains, as the price of Westlake Stock cannot fall below zero, the put buyer does gain as the price drops. So, one way investors can hedge Westlake Chemical's position is by buying a put option against it. The put option used this way is usually referred to as insurance. If an undesired outcome occurs and loss on holding Westlake Chemical will be realized, the loss incurred will be offset by the profits made with the option trade.
Westlake Chemical's PUT expiring on 2024-04-19
Profit |
| Westlake Chemical Price At Expiration |
Current Westlake Chemical Insurance Chain
| Delta | Gamma | Open Int | Expiration | Current Spread | Last Price | |||
Put | 2024-04-19 PUT at $155.0 | -0.7316 | 0.0365 | 1119 | 2024-04-19 | 3.5 - 7.5 | 1.71 | View |
Put | 2024-04-19 PUT at $150.0 | -0.6803 | 0.1631 | 5 | 2024-04-19 | 1.05 - 1.95 | 1.0 | View |
Put | 2024-04-19 PUT at $145.0 | -0.1093 | 0.0569 | 11 | 2024-04-19 | 0.05 - 0.3 | 0.25 | View |
Put | 2024-04-19 PUT at $140.0 | -0.0807 | 0.0223 | 36 | 2024-04-19 | 0.0 - 0.25 | 0.25 | View |
Westlake Chemical Stock Volatility Analysis
Volatility refers to the frequency at which Westlake Chemical stock price increases or decreases within a specified period. These fluctuations usually indicate the level of risk that's associated with Westlake Chemical's price changes. Investors will then calculate the volatility of Westlake Chemical's stock to predict their future moves. A stock that has erratic price changes quickly hits new highs, and lows are considered highly volatile. A stock with relatively stable price changes has low volatility. A highly volatile stock is riskier, but the risk cuts both ways. Investing in highly volatile security can either be highly successful, or you may experience significant failure. There are two main types of Westlake Chemical's volatility:
Historical Volatility
This type of stock volatility measures Westlake Chemical's fluctuations based on previous trends. It's commonly used to predict Westlake Chemical's future behavior based on its past. However, it cannot conclusively determine the future direction of the stock.Implied Volatility
This type of volatility provides a positive outlook on future price fluctuations for Westlake Chemical's current market price. This means that the stock will return to its initially predicted market price. This type of volatility can be derived from derivative instruments written on Westlake Chemical's to be redeemed at a future date.Transformation |
The output start index for this execution was zero with a total number of output elements of sixty-one. Westlake Chemical Average Price is the average of the sum of open, high, low and close daily prices of a bar. It can be used to smooth an indicator that normally takes just the closing price as input.
Westlake Chemical Projected Return Density Against Market
Considering the 90-day investment horizon the stock has the beta coefficient of 1.6477 . This entails as the benchmark fluctuates upward, the company is expected to outperform it on average. However, if the benchmark returns are projected to be negative, Westlake Chemical will likely underperform.Most traded equities are subject to two types of risk - systematic (i.e., market) and unsystematic (i.e., nonmarket or company-specific) risk. Unsystematic risk is the risk that events specific to Westlake Chemical or Chemicals sector will adversely affect the stock's price. This type of risk can be diversified away by owning several different stocks in different industries whose stock prices have shown a small correlation to each other. On the other hand, systematic risk is the risk that Westlake Chemical's price will be affected by overall stock market movements and cannot be diversified away. So, no matter how many positions you have, you cannot eliminate market risk. However, you can measure a Westlake stock's historical response to market movements and buy it if you are comfortable with its volatility direction. Beta and standard deviation are two commonly used measures to help you make the right decision.
Westlake Chemical has an alpha of 0.0643, implying that it can generate a 0.0643 percent excess return over NYSE Composite after adjusting for the inherited market risk (beta). Predicted Return Density |
| Returns |
What Drives a Westlake Chemical Price Volatility?
Several factors can influence a stock's market volatility:Industry
Specific events can influence volatility within a particular industry. For instance, a significant weather upheaval in a crucial oil-production site may cause oil prices to increase in the oil sector. The direct result will be the rise in the stock price of oil distribution companies. Similarly, any government regulation in a specific industry could negatively influence stock prices due to increased regulations on compliance that may impact the company's future earnings and growth.Political and Economic environment
When governments make significant decisions regarding trade agreements, policies, and legislation regarding specific industries, they will influence stock prices. Everything from speeches to elections may influence investors, who can directly influence the stock prices in any particular industry. The prevailing economic situation also plays a significant role in stock prices. When the economy is doing well, investors will have a positive reaction and hence, better stock prices and vice versa.The Company's Performance
Sometimes volatility will only affect an individual company. For example, a revolutionary product launch or strong earnings report may attract many investors to purchase the company. This positive attention will raise the company's stock price. In contrast, product recalls and data breaches may negatively influence a company's stock prices.Westlake Chemical Stock Risk Measures
Considering the 90-day investment horizon the coefficient of variation of Westlake Chemical is 1478.75. The daily returns are distributed with a variance of 3.35 and standard deviation of 1.83. The mean deviation of Westlake Chemical is currently at 1.3. For similar time horizon, the selected benchmark (NYSE Composite) has volatility of 0.62
α | Alpha over NYSE Composite | 0.06 | |
β | Beta against NYSE Composite | 1.65 | |
σ | Overall volatility | 1.83 | |
Ir | Information ratio | 0.06 |
Westlake Chemical Stock Return Volatility
Westlake Chemical historical daily return volatility represents how much of Westlake Chemical stock's daily returns swing around its mean - it is a statistical measure of its dispersion of returns. The company has volatility of 1.8309% on return distribution over 90 days investment horizon. By contrast, NYSE Composite accepts 0.6214% volatility on return distribution over the 90 days horizon. Performance |
| Timeline |
About Westlake Chemical Volatility
Volatility is a rate at which the price of Westlake Chemical or any other equity instrument increases or decreases for a given set of returns. It is measured by calculating the standard deviation of the annualized returns over a given period of time and shows the range to which the price of Westlake Chemical may increase or decrease. In other words, similar to Westlake's beta indicator, it measures the risk of Westlake Chemical and helps estimate the fluctuations that may happen in a short period of time. So if prices of Westlake Chemical fluctuate rapidly in a short time span, it is termed to have high volatility, and if it swings slowly in a more extended period, it is understood to have low volatility.
Please read more on our technical analysis page.| Last Reported | Projected for Next Year | ||
| Selling And Marketing Expenses | 47.1 M | 28.6 M | |
| Market Cap | 17.9 B | 18.8 B |
Westlake Chemical's stock volatility refers to the amount of uncertainty or risk involved with the size of changes in its stock's price. It is a statistical measure of the dispersion of returns on Westlake Stock over a specified period of time, often expressed as the standard deviation of daily returns. In other words, it measures how much Westlake Chemical's price varies over time.
3 ways to utilize Westlake Chemical's volatility to invest better
Higher Westlake Chemical's stock volatility means that the price of its stock is changing rapidly and unpredictably, while lower stock volatility indicates that the price of Westlake Chemical stock is relatively stable. Investors and traders use stock volatility as an indicator of risk and potential reward, as stocks with higher volatility can offer the potential for more significant returns but also come with a greater risk of losses. Westlake Chemical stock volatility can provide helpful information for making investment decisions in the following ways:- Measuring Risk: Volatility can be used as a measure of risk, which can help you determine the potential fluctuations in the value of Westlake Chemical investment. A higher volatility means higher risk and potentially larger changes in value.
- Identifying Opportunities: High volatility in Westlake Chemical's stock can indicate that there is potential for significant price movements, either up or down, which could present investment opportunities.
- Diversification: Understanding how the volatility of Westlake Chemical's stock relates to your other investments can help you create a well-diversified portfolio of assets with varying levels of risk.
Westlake Chemical Investment Opportunity
Westlake Chemical has a volatility of 1.83 and is 2.95 times more volatile than NYSE Composite. 16 percent of all equities and portfolios are less risky than Westlake Chemical. You can use Westlake Chemical to enhance the returns of your portfolios. The stock experiences a normal upward fluctuation. Check odds of Westlake Chemical to be traded at $156.39 in 90 days.Very weak diversification
The correlation between Westlake Chemical and NYA is 0.56 (i.e., Very weak diversification) for selected investment horizon. Overlapping area represents the amount of risk that can be diversified away by holding Westlake Chemical and NYA in the same portfolio, assuming nothing else is changed.
Westlake Chemical Additional Risk Indicators
The analysis of Westlake Chemical's secondary risk indicators is one of the essential steps in making a buy or sell decision. The process involves identifying the amount of risk involved in Westlake Chemical's investment and either accepting that risk or mitigating it. Along with some common measures of Westlake Chemical stock's risk such as standard deviation, beta, or value at risk, we also provide a set of secondary indicators that can assist in the individual investment decision or help in hedging the risk of your existing portfolios.
| Risk Adjusted Performance | 0.0646 | |||
| Market Risk Adjusted Performance | 0.1076 | |||
| Mean Deviation | 1.32 | |||
| Semi Deviation | 1.86 | |||
| Downside Deviation | 2.03 | |||
| Coefficient Of Variation | 1066.41 | |||
| Standard Deviation | 1.82 |
Please note, the risk measures we provide can be used independently or collectively to perform a risk assessment. When comparing two potential stocks, we recommend comparing similar stocks with homogenous growth potential and valuation from related markets to determine which investment holds the most risk.
Westlake Chemical Suggested Diversification Pairs
Pair trading is one of the very effective strategies used by professional day traders and hedge funds capitalizing on short-time and mid-term market inefficiencies. The approach is based on the fact that the ratio of prices of two correlating shares is long-term stable and oscillates around the average value. If the correlation ratio comes outside the common area, you can speculate with a high success rate that the ratio will return to the mean value and collect a profit.
The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against Westlake Chemical as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. Westlake Chemical's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, Westlake Chemical's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to Westlake Chemical.
When determining whether Westlake Chemical is a good investment, qualitative aspects like company management, corporate governance, and ethical practices play a significant role. A comparison with peer companies also provides context and helps to understand if Westlake Stock is undervalued or overvalued. This multi-faceted approach, blending both quantitative and qualitative analysis, forms a solid foundation for making an informed investment decision about Westlake Chemical Stock. Highlighted below are key reports to facilitate an investment decision about Westlake Chemical Stock: Check out Your Current Watchlist to better understand how to build diversified portfolios, which includes a position in Westlake Chemical. Also, note that the market value of any company could be tightly coupled with the direction of predictive economic indicators such as signals in bureau of economic analysis. For more information on how to buy Westlake Stock please use our How to buy in Westlake Stock guide.You can also try the Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
Complementary Tools for Westlake Stock analysis
When running Westlake Chemical's price analysis, check to measure Westlake Chemical's market volatility, profitability, liquidity, solvency, efficiency, growth potential, financial leverage, and other vital indicators. We have many different tools that can be utilized to determine how healthy Westlake Chemical is operating at the current time. Most of Westlake Chemical's value examination focuses on studying past and present price action to predict the probability of Westlake Chemical's future price movements. You can analyze the entity against its peers and the financial market as a whole to determine factors that move Westlake Chemical's price. Additionally, you may evaluate how the addition of Westlake Chemical to your portfolios can decrease your overall portfolio volatility.
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Is Westlake Chemical's industry expected to grow? Or is there an opportunity to expand the business' product line in the future? Factors like these will boost the valuation of Westlake Chemical. If investors know Westlake will grow in the future, the company's valuation will be higher. The financial industry is built on trying to define current growth potential and future valuation accurately. All the valuation information about Westlake Chemical listed above have to be considered, but the key to understanding future value is determining which factors weigh more heavily than others.
Quarterly Earnings Growth (0.29) | Dividend Share 1.714 | Earnings Share 3.69 | Revenue Per Share 98.18 | Quarterly Revenue Growth (0.14) |
The market value of Westlake Chemical is measured differently than its book value, which is the value of Westlake that is recorded on the company's balance sheet. Investors also form their own opinion of Westlake Chemical's value that differs from its market value or its book value, called intrinsic value, which is Westlake Chemical's true underlying value. Investors use various methods to calculate intrinsic value and buy a stock when its market value falls below its intrinsic value. Because Westlake Chemical's market value can be influenced by many factors that don't directly affect Westlake Chemical's underlying business (such as a pandemic or basic market pessimism), market value can vary widely from intrinsic value.
Please note, there is a significant difference between Westlake Chemical's value and its price as these two are different measures arrived at by different means. Investors typically determine if Westlake Chemical is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Westlake Chemical's price is the amount at which it trades on the open market and represents the number that a seller and buyer find agreeable to each party.