Correlation Between Woodside Energy and APA
Can any of the company-specific risk be diversified away by investing in both Woodside Energy and APA 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 APA 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 APA Corporation, you can compare the effects of market volatilities on Woodside Energy and APA 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 APA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woodside Energy and APA.
Diversification Opportunities for Woodside Energy and APA
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Woodside and APA is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Woodside Energy Group and APA Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APA Corporation 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 APA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APA Corporation has no effect on the direction of Woodside Energy i.e., Woodside Energy and APA go up and down completely randomly.
Pair Corralation between Woodside Energy and APA
Considering the 90-day investment horizon Woodside Energy Group is expected to generate 0.55 times more return on investment than APA. However, Woodside Energy Group is 1.82 times less risky than APA. It trades about 0.06 of its potential returns per unit of risk. APA Corporation is currently generating about -0.05 per unit of risk. If you would invest 1,575 in Woodside Energy Group on September 1, 2024 and sell it today you would earn a total of 29.00 from holding Woodside Energy Group or generate 1.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Woodside Energy Group vs. APA Corp.
Performance |
| Timeline |
| Woodside Energy Group |
| APA Corporation |
Woodside Energy and APA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Woodside Energy and APA
The main advantage of trading using opposite Woodside Energy and APA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woodside Energy position performs unexpectedly, APA 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 APA will offset losses from the drop in APA'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 Managers module to screen money managers from public funds and ETFs managed around the world.
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