Correlation Between Baytex Energy and Woodside Energy
Can any of the company-specific risk be diversified away by investing in both Baytex Energy 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 Baytex Energy and Woodside Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baytex Energy Corp and Woodside Energy Group, you can compare the effects of market volatilities on Baytex Energy 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 Baytex Energy with a short position of Woodside Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baytex Energy and Woodside Energy.
Diversification Opportunities for Baytex Energy and Woodside Energy
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Baytex and Woodside is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Baytex Energy Corp 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 Baytex Energy 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 Baytex Energy Corp 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 Baytex Energy i.e., Baytex Energy and Woodside Energy go up and down completely randomly.
Pair Corralation between Baytex Energy and Woodside Energy
Considering the 90-day investment horizon Baytex Energy Corp is expected to under-perform the Woodside Energy. In addition to that, Baytex Energy is 1.45 times more volatile than Woodside Energy Group. It trades about -0.04 of its total potential returns per unit of risk. Woodside Energy Group is currently generating about -0.04 per unit of volatility. If you would invest 1,766 in Woodside Energy Group on August 30, 2024 and sell it today you would lose (171.00) from holding Woodside Energy Group or give up 9.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baytex Energy Corp vs. Woodside Energy Group
Performance |
| Timeline |
| Baytex Energy Corp |
| Woodside Energy Group |
Baytex Energy and Woodside Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baytex Energy and Woodside Energy
The main advantage of trading using opposite Baytex Energy and Woodside Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baytex Energy 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.| Baytex Energy vs. Vermilion Energy | Baytex Energy vs. Obsidian Energy | Baytex Energy vs. Canadian Natural Resources | Baytex Energy vs. Ovintiv |
| Woodside Energy vs. Devon Energy | Woodside Energy vs. ConocoPhillips | Woodside Energy vs. Diamondback Energy | Woodside Energy vs. Occidental Petroleum |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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