Correlation Between Inpex Corp and Weatherford International
Can any of the company-specific risk be diversified away by investing in both Inpex Corp and Weatherford International 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 Inpex Corp and Weatherford International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Inpex Corp ADR and Weatherford International Plc, you can compare the effects of market volatilities on Inpex Corp and Weatherford International 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 Inpex Corp with a short position of Weatherford International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inpex Corp and Weatherford International.
Diversification Opportunities for Inpex Corp and Weatherford International
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Inpex and Weatherford is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Inpex Corp ADR and Weatherford International Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weatherford International and Inpex Corp 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 Inpex Corp ADR are associated (or correlated) with Weatherford International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weatherford International has no effect on the direction of Inpex Corp i.e., Inpex Corp and Weatherford International go up and down completely randomly.
Pair Corralation between Inpex Corp and Weatherford International
Assuming the 90 days horizon Inpex Corp is expected to generate 42.17 times less return on investment than Weatherford International. But when comparing it to its historical volatility, Inpex Corp ADR is 10.45 times less risky than Weatherford International. It trades about 0.04 of its potential returns per unit of risk. Weatherford International Plc is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 22.00 in Weatherford International Plc on August 30, 2024 and sell it today you would earn a total of 78.00 from holding Weatherford International Plc or generate 354.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 31.25% |
| Values | Daily Returns |
Inpex Corp ADR vs. Weatherford International Plc
Performance |
| Timeline |
| Inpex Corp ADR |
| Weatherford International |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Inpex Corp and Weatherford International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inpex Corp and Weatherford International
The main advantage of trading using opposite Inpex Corp and Weatherford International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inpex Corp position performs unexpectedly, Weatherford International 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 Weatherford International will offset losses from the drop in Weatherford International's long position.| Inpex Corp vs. Permian Resources | Inpex Corp vs. Devon Energy | Inpex Corp vs. EOG Resources | Inpex Corp 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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