Correlation Between Woodside Energy and Aker BP
Can any of the company-specific risk be diversified away by investing in both Woodside Energy and Aker BP 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 Woodside Energy and Aker BP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Woodside Energy Group and Aker BP ASA, you can compare the effects of market volatilities on Woodside Energy and Aker BP 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 Woodside Energy with a short position of Aker BP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woodside Energy and Aker BP.
Diversification Opportunities for Woodside Energy and Aker BP
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Woodside and Aker is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Woodside Energy Group and Aker BP ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aker BP ASA and Woodside Energy 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 Woodside Energy Group are associated (or correlated) with Aker BP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aker BP ASA has no effect on the direction of Woodside Energy i.e., Woodside Energy and Aker BP go up and down completely randomly.
Pair Corralation between Woodside Energy and Aker BP
Considering the 90-day investment horizon Woodside Energy is expected to generate 1.73 times less return on investment than Aker BP. But when comparing it to its historical volatility, Woodside Energy Group is 3.99 times less risky than Aker BP. It trades about 0.06 of its potential returns per unit of risk. Aker BP ASA is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,030 in Aker BP ASA on September 1, 2024 and sell it today you would lose (10.00) from holding Aker BP ASA or give up 0.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Woodside Energy Group vs. Aker BP ASA
Performance |
| Timeline |
| Woodside Energy Group |
| Aker BP ASA |
Woodside Energy and Aker BP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Woodside Energy and Aker BP
The main advantage of trading using opposite Woodside Energy and Aker BP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woodside Energy position performs unexpectedly, Aker BP 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 Aker BP will offset losses from the drop in Aker BP's long position.| Woodside Energy vs. Epsilon Energy | Woodside Energy vs. Crescent Energy Co | Woodside Energy vs. Evolution Petroleum | Woodside Energy vs. XXL Energy 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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