Correlation Between Woodside Energy and Coterra Energy
Can any of the company-specific risk be diversified away by investing in both Woodside Energy and Coterra Energy 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 Coterra Energy 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 Coterra Energy, you can compare the effects of market volatilities on Woodside Energy and Coterra Energy 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 Coterra Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woodside Energy and Coterra Energy.
Diversification Opportunities for Woodside Energy and Coterra Energy
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Woodside and Coterra is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Woodside Energy Group and Coterra Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coterra Energy 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 Coterra Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coterra Energy has no effect on the direction of Woodside Energy i.e., Woodside Energy and Coterra Energy go up and down completely randomly.
Pair Corralation between Woodside Energy and Coterra Energy
Considering the 90-day investment horizon Woodside Energy Group is expected to under-perform the Coterra Energy. But the stock apears to be less risky and, when comparing its historical volatility, Woodside Energy Group is 1.03 times less risky than Coterra Energy. The stock trades about -0.02 of its potential returns per unit of risk. The Coterra Energy is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 2,614 in Coterra Energy on November 3, 2024 and sell it today you would earn a total of 158.00 from holding Coterra Energy or generate 6.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Woodside Energy Group vs. Coterra Energy
Performance |
| Timeline |
| Woodside Energy Group |
| Coterra Energy |
Woodside Energy and Coterra Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Woodside Energy and Coterra Energy
The main advantage of trading using opposite Woodside Energy and Coterra Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woodside Energy position performs unexpectedly, Coterra Energy 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 Coterra Energy will offset losses from the drop in Coterra Energy's long position.| Woodside Energy vs. EOG Resources | Woodside Energy vs. APA Corporation | Woodside Energy vs. Range Resources Corp | Woodside Energy vs. Diamondback Energy |
| Coterra Energy vs. Devon Energy | Coterra Energy vs. Diamondback Energy | Coterra Energy vs. EOG Resources | Coterra Energy vs. ConocoPhillips |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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