Correlation Between Petrofac and Worley Parsons
Can any of the company-specific risk be diversified away by investing in both Petrofac and Worley Parsons 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 Petrofac and Worley Parsons into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Petrofac Ltd ADR and Worley Parsons, you can compare the effects of market volatilities on Petrofac and Worley Parsons 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 Petrofac with a short position of Worley Parsons. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petrofac and Worley Parsons.
Diversification Opportunities for Petrofac and Worley Parsons
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Petrofac and Worley is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Petrofac Ltd ADR and Worley Parsons in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Worley Parsons and Petrofac 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 Petrofac Ltd ADR are associated (or correlated) with Worley Parsons. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Worley Parsons has no effect on the direction of Petrofac i.e., Petrofac and Worley Parsons go up and down completely randomly.
Pair Corralation between Petrofac and Worley Parsons
Assuming the 90 days horizon Petrofac Ltd ADR is expected to under-perform the Worley Parsons. In addition to that, Petrofac is 2.45 times more volatile than Worley Parsons. It trades about -0.03 of its total potential returns per unit of risk. Worley Parsons is currently generating about -0.01 per unit of volatility. If you would invest 1,081 in Worley Parsons on November 2, 2024 and sell it today you would lose (134.00) from holding Worley Parsons or give up 12.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Petrofac Ltd ADR vs. Worley Parsons
Performance |
| Timeline |
| Petrofac ADR |
| Worley Parsons |
Petrofac and Worley Parsons Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petrofac and Worley Parsons
The main advantage of trading using opposite Petrofac and Worley Parsons positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petrofac position performs unexpectedly, Worley Parsons 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 Worley Parsons will offset losses from the drop in Worley Parsons' long position.The idea behind Petrofac Ltd ADR and Worley Parsons pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Worley Parsons vs. Petrofac Ltd ADR | Worley Parsons vs. Saipem SpA | Worley Parsons vs. SMG Industries | Worley Parsons vs. Bri Chem Corp |
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 .
Other Complementary Tools
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets |