Correlation Between Algorand and Whiting Petroleum

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

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

Diversification Opportunities for Algorand and Whiting Petroleum

-0.52

Correlation Coefficient

Algorand  Whiting Petroleum

Excellent diversification

The 3 months correlation between Algorand and Whiting is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Algorand and Whiting Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whiting Petroleum and Algorand 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 Algorand are associated (or correlated) with Whiting Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Whiting Petroleum has no effect on the direction of Algorand i.e., Algorand and Whiting Petroleum go up and down completely randomly.

Pair Corralation between Algorand and Whiting Petroleum

Assuming the 90 days trading horizon Algorand is expected to generate 1.58 times more return on investment than Whiting Petroleum. However, Algorand is 1.58 times more volatile than Whiting Petroleum. It trades about 0.05 of its potential returns per unit of risk. Whiting Petroleum is currently generating about 0.03 per unit of risk. If you would invest  27.00  in Algorand on October 25, 2024 and sell it today you would earn a total of  14.00  from holding Algorand or generate 51.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	75.25%
Values	Daily Returns

Algorand  vs.  Whiting Petroleum

Algorand

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Algorand are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Algorand exhibited solid returns over the last few months and may actually be approaching a breakup point.

Whiting Petroleum

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Whiting Petroleum has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Whiting Petroleum is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Algorand and Whiting Petroleum

The main advantage of trading using opposite Algorand and Whiting Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algorand position performs unexpectedly, Whiting Petroleum 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 Whiting Petroleum will offset losses from the drop in Whiting Petroleum's long position.

The idea behind Algorand and Whiting Petroleum 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.