Correlation Between Woodside Energy and North European
Can any of the company-specific risk be diversified away by investing in both Woodside Energy and North European 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 North European 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 North European Oil, you can compare the effects of market volatilities on Woodside Energy and North European 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 North European. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woodside Energy and North European.
Diversification Opportunities for Woodside Energy and North European
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Woodside and North is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Woodside Energy Group and North European Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North European Oil 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 North European. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North European Oil has no effect on the direction of Woodside Energy i.e., Woodside Energy and North European go up and down completely randomly.
Pair Corralation between Woodside Energy and North European
Considering the 90-day investment horizon Woodside Energy Group is expected to under-perform the North European. But the stock apears to be less risky and, when comparing its historical volatility, Woodside Energy Group is 1.74 times less risky than North European. The stock trades about -0.02 of its potential returns per unit of risk. The North European Oil is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 451.00 in North European Oil on November 3, 2024 and sell it today you would earn a total of 1.00 from holding North European Oil or generate 0.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Woodside Energy Group vs. North European Oil
Performance |
| Timeline |
| Woodside Energy Group |
| North European Oil |
Woodside Energy and North European Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Woodside Energy and North European
The main advantage of trading using opposite Woodside Energy and North European positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woodside Energy position performs unexpectedly, North European 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 North European will offset losses from the drop in North European's long position.| Woodside Energy vs. EOG Resources | Woodside Energy vs. APA Corporation | Woodside Energy vs. Range Resources Corp | Woodside Energy vs. Diamondback Energy |
| North European vs. Cross Timbers Royalty | North European vs. VOC Energy Trust | North European vs. Sabine Royalty Trust | North European vs. Permianville Royalty Trust |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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