Correlation Between California Resources and Whiting Petroleum
Can any of the company-specific risk be diversified away by investing in both California Resources and Whiting Petroleum 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 California Resources and Whiting Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between California Resources and Whiting Petroleum, you can compare the effects of market volatilities on California Resources and Whiting Petroleum 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 California Resources with a short position of Whiting Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of California Resources and Whiting Petroleum.
Diversification Opportunities for California Resources and Whiting Petroleum
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between California and Whiting is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding California Resources and Whiting Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whiting Petroleum and California Resources 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 California Resources are associated (or correlated) with Whiting Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Whiting Petroleum has no effect on the direction of California Resources i.e., California Resources and Whiting Petroleum go up and down completely randomly.
Pair Corralation between California Resources and Whiting Petroleum
Assuming the 90 days horizon California Resources is expected to generate 0.92 times more return on investment than Whiting Petroleum. However, California Resources is 1.08 times less risky than Whiting Petroleum. It trades about 0.12 of its potential returns per unit of risk. Whiting Petroleum is currently generating about -0.08 per unit of risk. If you would invest 833.00 in California Resources on September 2, 2024 and sell it today you would earn a total of 879.00 from holding California Resources or generate 105.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 80.16% |
| Values | Daily Returns |
California Resources vs. Whiting Petroleum
Performance |
| Timeline |
| California Resources |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
| Whiting Petroleum |
California Resources and Whiting Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with California Resources and Whiting Petroleum
The main advantage of trading using opposite California Resources and Whiting Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if California Resources position performs unexpectedly, Whiting Petroleum 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 Whiting Petroleum will offset losses from the drop in Whiting Petroleum's long position.| California Resources vs. Cardinal Energy | California Resources vs. Spartan Delta Corp | California Resources vs. Delek Group | California Resources vs. Bonterra Energy Corp |
| Whiting Petroleum vs. Permian Resources | Whiting Petroleum vs. Devon Energy | Whiting Petroleum vs. EOG Resources | Whiting Petroleum vs. Coterra Energy |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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