Correlation Between Inpex Corp and Woodside Petroleum
Can any of the company-specific risk be diversified away by investing in both Inpex Corp and Woodside 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 Inpex Corp and Woodside Petroleum 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 Woodside Petroleum, you can compare the effects of market volatilities on Inpex Corp and Woodside 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 Inpex Corp with a short position of Woodside Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inpex Corp and Woodside Petroleum.
Diversification Opportunities for Inpex Corp and Woodside Petroleum
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Inpex and Woodside is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Inpex Corp ADR and Woodside Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woodside Petroleum 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 Woodside Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woodside Petroleum has no effect on the direction of Inpex Corp i.e., Inpex Corp and Woodside Petroleum go up and down completely randomly.
Pair Corralation between Inpex Corp and Woodside Petroleum
Assuming the 90 days horizon Inpex Corp ADR is expected to under-perform the Woodside Petroleum. But the pink sheet apears to be less risky and, when comparing its historical volatility, Inpex Corp ADR is 4.49 times less risky than Woodside Petroleum. The pink sheet trades about -0.16 of its potential returns per unit of risk. The Woodside Petroleum is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 1,725 in Woodside Petroleum on November 3, 2024 and sell it today you would lose (176.00) from holding Woodside Petroleum or give up 10.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Inpex Corp ADR vs. Woodside Petroleum
Performance |
| Timeline |
| Inpex Corp ADR |
| Woodside Petroleum |
Inpex Corp and Woodside Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inpex Corp and Woodside Petroleum
The main advantage of trading using opposite Inpex Corp and Woodside Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inpex Corp position performs unexpectedly, Woodside 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 Woodside Petroleum will offset losses from the drop in Woodside Petroleum's long position.| Inpex Corp vs. San Leon Energy | Inpex Corp vs. Enwell Energy plc | Inpex Corp vs. Dno ASA | Inpex Corp vs. Questerre Energy |
| Woodside Petroleum vs. Inpex Corp ADR | Woodside Petroleum vs. Falcon Oil Gas | Woodside Petroleum vs. Pantheon Resources Plc | Woodside Petroleum vs. Woodside Energy Group |
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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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