Correlation Between Canadian Natural and Woodside Energy
Can any of the company-specific risk be diversified away by investing in both Canadian Natural 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 Canadian Natural and Woodside Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canadian Natural Resources and Woodside Energy Group, you can compare the effects of market volatilities on Canadian Natural 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 Canadian Natural with a short position of Woodside Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Natural and Woodside Energy.
Diversification Opportunities for Canadian Natural and Woodside Energy
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Canadian and Woodside is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Natural Resources 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 Canadian Natural 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 Canadian Natural Resources 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 Canadian Natural i.e., Canadian Natural and Woodside Energy go up and down completely randomly.
Pair Corralation between Canadian Natural and Woodside Energy
Assuming the 90 days horizon Canadian Natural is expected to generate 2.54 times less return on investment than Woodside Energy. But when comparing it to its historical volatility, Canadian Natural Resources is 1.45 times less risky than Woodside Energy. It trades about 0.05 of its potential returns per unit of risk. Woodside Energy Group is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,439 in Woodside Energy Group on August 30, 2024 and sell it today you would earn a total of 47.00 from holding Woodside Energy Group or generate 3.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Canadian Natural Resources vs. Woodside Energy Group
Performance |
| Timeline |
| Canadian Natural Res |
| Woodside Energy Group |
Canadian Natural and Woodside Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Natural and Woodside Energy
The main advantage of trading using opposite Canadian Natural and Woodside Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Natural 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.| Canadian Natural vs. Alibaba Group Holding | Canadian Natural vs. WOODSIDE ENE SPADR | Canadian Natural vs. Woodside Energy Group |
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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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