Correlation Between Major Drilling and Woodside Energy
Can any of the company-specific risk be diversified away by investing in both Major Drilling and Woodside Energy 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 Major Drilling and Woodside Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Major Drilling Group and Woodside Energy Group, you can compare the effects of market volatilities on Major Drilling and Woodside Energy 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 Major Drilling with a short position of Woodside Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Major Drilling and Woodside Energy.
Diversification Opportunities for Major Drilling and Woodside Energy
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Major and Woodside is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Major Drilling Group and Woodside Energy Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woodside Energy Group and Major Drilling 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 Major Drilling Group are associated (or correlated) with Woodside Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woodside Energy Group has no effect on the direction of Major Drilling i.e., Major Drilling and Woodside Energy go up and down completely randomly.
Pair Corralation between Major Drilling and Woodside Energy
Assuming the 90 days horizon Major Drilling Group is expected to generate 1.43 times more return on investment than Woodside Energy. However, Major Drilling is 1.43 times more volatile than Woodside Energy Group. It trades about 0.04 of its potential returns per unit of risk. Woodside Energy Group is currently generating about -0.03 per unit of risk. If you would invest 474.00 in Major Drilling Group on November 28, 2024 and sell it today you would earn a total of 111.00 from holding Major Drilling Group or generate 23.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Major Drilling Group vs. Woodside Energy Group
Performance |
| Timeline |
| Major Drilling Group |
| Woodside Energy Group |
Major Drilling and Woodside Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Major Drilling and Woodside Energy
The main advantage of trading using opposite Major Drilling and Woodside Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Major Drilling position performs unexpectedly, Woodside Energy 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 Woodside Energy will offset losses from the drop in Woodside Energy's long position.| Major Drilling vs. SIDETRADE EO 1 | Major Drilling vs. EPSILON HEALTHCARE LTD | Major Drilling vs. GOME Retail Holdings | Major Drilling vs. CARDINAL HEALTH |
| Woodside Energy vs. SLR Investment Corp | Woodside Energy vs. Investment AB Latour | Woodside Energy vs. AGNC Investment Corp | Woodside Energy vs. Gladstone 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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