Correlation Between Whiting Petroleum and Prairie Provident
Can any of the company-specific risk be diversified away by investing in both Whiting Petroleum and Prairie Provident 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 Whiting Petroleum and Prairie Provident into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Whiting Petroleum and Prairie Provident Resources, you can compare the effects of market volatilities on Whiting Petroleum and Prairie Provident 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 Whiting Petroleum with a short position of Prairie Provident. Check out your portfolio center. Please also check ongoing floating volatility patterns of Whiting Petroleum and Prairie Provident.
Diversification Opportunities for Whiting Petroleum and Prairie Provident
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Whiting and Prairie is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Whiting Petroleum and Prairie Provident Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prairie Provident and Whiting Petroleum 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 Whiting Petroleum are associated (or correlated) with Prairie Provident. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prairie Provident has no effect on the direction of Whiting Petroleum i.e., Whiting Petroleum and Prairie Provident go up and down completely randomly.
Pair Corralation between Whiting Petroleum and Prairie Provident
Assuming the 90 days horizon Whiting Petroleum is expected to under-perform the Prairie Provident. But the pink sheet apears to be less risky and, when comparing its historical volatility, Whiting Petroleum is 1.6 times less risky than Prairie Provident. The pink sheet trades about -0.02 of its potential returns per unit of risk. The Prairie Provident Resources is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 3.91 in Prairie Provident Resources on August 27, 2024 and sell it today you would lose (2.12) from holding Prairie Provident Resources or give up 54.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Whiting Petroleum vs. Prairie Provident Resources
Performance |
| Timeline |
| Whiting Petroleum |
| Prairie Provident |
Whiting Petroleum and Prairie Provident Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Whiting Petroleum and Prairie Provident
The main advantage of trading using opposite Whiting Petroleum and Prairie Provident positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Whiting Petroleum position performs unexpectedly, Prairie Provident 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 Prairie Provident will offset losses from the drop in Prairie Provident's long position.| Whiting Petroleum vs. Chord Energy Corp | Whiting Petroleum vs. Bristow Group | Whiting Petroleum vs. Pioneer Bancorp |
| Prairie Provident vs. Petroleo Brasileiro Petrobras | Prairie Provident vs. Equinor ASA ADR | Prairie Provident vs. Eni SpA ADR | Prairie Provident vs. YPF Sociedad Anonima |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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