Correlation Between Weatherford International and Whiting Petroleum
Can any of the company-specific risk be diversified away by investing in both Weatherford International and Whiting Petroleum 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 Weatherford International and Whiting Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Weatherford International PLC and Whiting Petroleum, you can compare the effects of market volatilities on Weatherford International and Whiting Petroleum 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 Weatherford International with a short position of Whiting Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weatherford International and Whiting Petroleum.
Diversification Opportunities for Weatherford International and Whiting Petroleum
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Weatherford and Whiting is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Weatherford International PLC and Whiting Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whiting Petroleum and Weatherford International 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 Weatherford International PLC are associated (or correlated) with Whiting Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Whiting Petroleum has no effect on the direction of Weatherford International i.e., Weatherford International and Whiting Petroleum go up and down completely randomly.
Pair Corralation between Weatherford International and Whiting Petroleum
Given the investment horizon of 90 days Weatherford International PLC is expected to generate 0.24 times more return on investment than Whiting Petroleum. However, Weatherford International PLC is 4.19 times less risky than Whiting Petroleum. It trades about 0.08 of its potential returns per unit of risk. Whiting Petroleum is currently generating about -0.08 per unit of risk. If you would invest 7,892 in Weatherford International PLC on August 30, 2024 and sell it today you would earn a total of 362.00 from holding Weatherford International PLC or generate 4.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Weatherford International PLC vs. Whiting Petroleum
Performance |
| Timeline |
| Weatherford International |
| Whiting Petroleum |
Weatherford International and Whiting Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weatherford International and Whiting Petroleum
The main advantage of trading using opposite Weatherford International and Whiting Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weatherford International position performs unexpectedly, Whiting Petroleum 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 Whiting Petroleum will offset losses from the drop in Whiting Petroleum's long position.| Weatherford International vs. Bristow Group | Weatherford International vs. RPC Inc | Weatherford International vs. NOV Inc | Weatherford International vs. Oceaneering International |
| Whiting Petroleum vs. Permian Resources | Whiting Petroleum vs. Devon Energy | Whiting Petroleum vs. EOG Resources | Whiting Petroleum vs. Coterra Energy |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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