Correlation Between WOODSIDE ENE and Karoon Energy
Can any of the company-specific risk be diversified away by investing in both WOODSIDE ENE and Karoon Energy 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 ENE and Karoon Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WOODSIDE ENE SPADR and Karoon Energy, you can compare the effects of market volatilities on WOODSIDE ENE and Karoon Energy 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 ENE with a short position of Karoon Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of WOODSIDE ENE and Karoon Energy.
Diversification Opportunities for WOODSIDE ENE and Karoon Energy
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between WOODSIDE and Karoon is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding WOODSIDE ENE SPADR and Karoon Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Karoon Energy and WOODSIDE ENE 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 ENE SPADR are associated (or correlated) with Karoon Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Karoon Energy has no effect on the direction of WOODSIDE ENE i.e., WOODSIDE ENE and Karoon Energy go up and down completely randomly.
Pair Corralation between WOODSIDE ENE and Karoon Energy
Assuming the 90 days horizon WOODSIDE ENE SPADR is expected to generate 0.92 times more return on investment than Karoon Energy. However, WOODSIDE ENE SPADR is 1.09 times less risky than Karoon Energy. It trades about 0.01 of its potential returns per unit of risk. Karoon Energy is currently generating about -0.04 per unit of risk. If you would invest 1,540 in WOODSIDE ENE SPADR on September 3, 2024 and sell it today you would lose (30.00) from holding WOODSIDE ENE SPADR or give up 1.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
WOODSIDE ENE SPADR vs. Karoon Energy
Performance |
| Timeline |
| WOODSIDE ENE SPADR |
| Karoon Energy |
WOODSIDE ENE and Karoon Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WOODSIDE ENE and Karoon Energy
The main advantage of trading using opposite WOODSIDE ENE and Karoon Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WOODSIDE ENE position performs unexpectedly, Karoon Energy 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 Karoon Energy will offset losses from the drop in Karoon Energy's long position.| WOODSIDE ENE vs. ATOSS SOFTWARE | WOODSIDE ENE vs. AXWAY SOFTWARE EO | WOODSIDE ENE vs. SANOK RUBBER ZY | WOODSIDE ENE vs. UPDATE SOFTWARE |
| Karoon Energy vs. Ebro Foods SA | Karoon Energy vs. Nomad Foods | Karoon Energy vs. Caseys General Stores | Karoon Energy vs. AEON STORES |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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