Correlation Between Cardano and Woodside Energy

Can any of the company-specific risk be diversified away by investing in both Cardano 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 Cardano and Woodside Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cardano and Woodside Energy Group, you can compare the effects of market volatilities on Cardano 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 Cardano with a short position of Woodside Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardano and Woodside Energy.

Diversification Opportunities for Cardano and Woodside Energy

0.56

Correlation Coefficient

Cardano  Woodside Energy

Very weak diversification

The 3 months correlation between Cardano and Woodside is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Cardano 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 Cardano 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 Cardano 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 Cardano i.e., Cardano and Woodside Energy go up and down completely randomly.

Pair Corralation between Cardano and Woodside Energy

Assuming the 90 days trading horizon Cardano is expected to under-perform the Woodside Energy. In addition to that, Cardano is 4.82 times more volatile than Woodside Energy Group. It trades about -0.02 of its total potential returns per unit of risk. Woodside Energy Group is currently generating about -0.01 per unit of volatility. If you would invest  1,354  in Woodside Energy Group on December 22, 2024 and sell it today you would lose (28.00) from holding Woodside Energy Group or give up 2.07% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	93.75%
Values	Daily Returns

Cardano  vs.  Woodside Energy Group

Cardano

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cardano has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Crypto's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for Cardano shareholders.

Woodside Energy Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Woodside Energy Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Woodside Energy is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Cardano and Woodside Energy

The main advantage of trading using opposite Cardano and Woodside Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardano 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 Cardano 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.

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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.