Correlation Between WOODSIDE ENE and Woodside Energy
Can any of the company-specific risk be diversified away by investing in both WOODSIDE ENE and Woodside 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 Woodside 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 Woodside Energy Group, you can compare the effects of market volatilities on WOODSIDE ENE and Woodside 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 Woodside Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of WOODSIDE ENE and Woodside Energy.
Diversification Opportunities for WOODSIDE ENE and Woodside Energy
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between WOODSIDE and Woodside is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding WOODSIDE ENE SPADR and Woodside Energy Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woodside Energy Group 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 Woodside Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woodside Energy Group has no effect on the direction of WOODSIDE ENE i.e., WOODSIDE ENE and Woodside Energy go up and down completely randomly.
Pair Corralation between WOODSIDE ENE and Woodside Energy
Assuming the 90 days horizon WOODSIDE ENE is expected to generate 1.21 times less return on investment than Woodside Energy. In addition to that, WOODSIDE ENE is 1.52 times more volatile than Woodside Energy Group. It trades about 0.05 of its total potential returns per unit of risk. Woodside Energy Group is currently generating about 0.09 per unit of volatility. If you would invest 1,439 in Woodside Energy Group on August 30, 2024 and sell it today you would earn a total of 47.00 from holding Woodside Energy Group or generate 3.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
WOODSIDE ENE SPADR vs. Woodside Energy Group
Performance |
| Timeline |
| WOODSIDE ENE SPADR |
| Woodside Energy Group |
WOODSIDE ENE and Woodside Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WOODSIDE ENE and Woodside Energy
The main advantage of trading using opposite WOODSIDE ENE and Woodside Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WOODSIDE ENE position performs unexpectedly, Woodside 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 Woodside Energy will offset losses from the drop in Woodside Energy's long position.The idea behind WOODSIDE ENE SPADR and Woodside Energy Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Woodside Energy vs. CosmoSteel Holdings Limited | Woodside Energy vs. Major Drilling Group | Woodside Energy vs. LEGACY IRON ORE | Woodside Energy vs. Avanos Medical |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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