Correlation Between Woodside Energy and PetroShale
Can any of the company-specific risk be diversified away by investing in both Woodside Energy and PetroShale 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 PetroShale 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 PetroShale, you can compare the effects of market volatilities on Woodside Energy and PetroShale 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 PetroShale. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woodside Energy and PetroShale.
Diversification Opportunities for Woodside Energy and PetroShale
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Woodside and PetroShale is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Woodside Energy Group and PetroShale in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PetroShale 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 PetroShale. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PetroShale has no effect on the direction of Woodside Energy i.e., Woodside Energy and PetroShale go up and down completely randomly.
Pair Corralation between Woodside Energy and PetroShale
Considering the 90-day investment horizon Woodside Energy Group is expected to under-perform the PetroShale. But the stock apears to be less risky and, when comparing its historical volatility, Woodside Energy Group is 1.83 times less risky than PetroShale. The stock trades about -0.02 of its potential returns per unit of risk. The PetroShale is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 39.00 in PetroShale on August 30, 2024 and sell it today you would lose (11.00) from holding PetroShale or give up 28.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Woodside Energy Group vs. PetroShale
Performance |
| Timeline |
| Woodside Energy Group |
| PetroShale |
Woodside Energy and PetroShale Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Woodside Energy and PetroShale
The main advantage of trading using opposite Woodside Energy and PetroShale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woodside Energy position performs unexpectedly, PetroShale 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 PetroShale will offset losses from the drop in PetroShale's long position.| Woodside Energy vs. EOG Resources | Woodside Energy vs. APA Corporation | Woodside Energy vs. Range Resources Corp | Woodside Energy vs. Diamondback Energy |
| PetroShale vs. Yamaha Motor Co | PetroShale vs. Nitto Denko Corp | PetroShale vs. Farmers Merchants Bancorp | PetroShale vs. Furukawa Electric Co |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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