Correlation Between Whiting Petroleum and Weatherford International
Can any of the company-specific risk be diversified away by investing in both Whiting Petroleum and Weatherford International 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 Weatherford International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Whiting Petroleum and Weatherford International PLC, you can compare the effects of market volatilities on Whiting Petroleum and Weatherford International 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 Weatherford International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Whiting Petroleum and Weatherford International.
Diversification Opportunities for Whiting Petroleum and Weatherford International
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Whiting and Weatherford is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Whiting Petroleum and Weatherford International PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weatherford International 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 Weatherford International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weatherford International has no effect on the direction of Whiting Petroleum i.e., Whiting Petroleum and Weatherford International go up and down completely randomly.
Pair Corralation between Whiting Petroleum and Weatherford International
Assuming the 90 days horizon Whiting Petroleum is expected to under-perform the Weatherford International. In addition to that, Whiting Petroleum is 3.04 times more volatile than Weatherford International PLC. It trades about -0.02 of its total potential returns per unit of risk. Weatherford International PLC is currently generating about -0.02 per unit of volatility. If you would invest 10,206 in Weatherford International PLC on August 27, 2024 and sell it today you would lose (1,623) from holding Weatherford International PLC or give up 15.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Whiting Petroleum vs. Weatherford International PLC
Performance |
| Timeline |
| Whiting Petroleum |
| Weatherford International |
Whiting Petroleum and Weatherford International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Whiting Petroleum and Weatherford International
The main advantage of trading using opposite Whiting Petroleum and Weatherford International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Whiting Petroleum position performs unexpectedly, Weatherford International 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 Weatherford International will offset losses from the drop in Weatherford International's long position.| Whiting Petroleum vs. Chord Energy Corp | Whiting Petroleum vs. Bristow Group | Whiting Petroleum vs. Pioneer Bancorp |
| Weatherford International vs. Bristow Group | Weatherford International vs. RPC Inc | Weatherford International vs. NOV Inc | Weatherford International vs. Oceaneering International |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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