Correlation Between Woodside Petroleum and Gulf Keystone
Can any of the company-specific risk be diversified away by investing in both Woodside Petroleum and Gulf Keystone 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 Petroleum and Gulf Keystone into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Woodside Petroleum and Gulf Keystone Petroleum, you can compare the effects of market volatilities on Woodside Petroleum and Gulf Keystone 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 Petroleum with a short position of Gulf Keystone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woodside Petroleum and Gulf Keystone.
Diversification Opportunities for Woodside Petroleum and Gulf Keystone
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Woodside and Gulf is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Woodside Petroleum and Gulf Keystone Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gulf Keystone Petroleum and Woodside 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 Woodside Petroleum are associated (or correlated) with Gulf Keystone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gulf Keystone Petroleum has no effect on the direction of Woodside Petroleum i.e., Woodside Petroleum and Gulf Keystone go up and down completely randomly.
Pair Corralation between Woodside Petroleum and Gulf Keystone
Assuming the 90 days horizon Woodside Petroleum is expected to under-perform the Gulf Keystone. In addition to that, Woodside Petroleum is 1.55 times more volatile than Gulf Keystone Petroleum. It trades about -0.03 of its total potential returns per unit of risk. Gulf Keystone Petroleum is currently generating about 0.16 per unit of volatility. If you would invest 186.00 in Gulf Keystone Petroleum on November 3, 2024 and sell it today you would earn a total of 27.00 from holding Gulf Keystone Petroleum or generate 14.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Woodside Petroleum vs. Gulf Keystone Petroleum
Performance |
| Timeline |
| Woodside Petroleum |
| Gulf Keystone Petroleum |
Woodside Petroleum and Gulf Keystone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Woodside Petroleum and Gulf Keystone
The main advantage of trading using opposite Woodside Petroleum and Gulf Keystone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woodside Petroleum position performs unexpectedly, Gulf Keystone 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 Gulf Keystone will offset losses from the drop in Gulf Keystone's long position.| Woodside Petroleum vs. Inpex Corp ADR | Woodside Petroleum vs. Falcon Oil Gas | Woodside Petroleum vs. Pantheon Resources Plc | Woodside Petroleum vs. Woodside Energy Group |
| Gulf Keystone vs. San Leon Energy | Gulf Keystone vs. Enwell Energy plc | Gulf Keystone vs. Dno ASA | Gulf Keystone vs. Questerre 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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