Correlation Between Banco De and Whiting Petroleum

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

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

Diversification Opportunities for Banco De and Whiting Petroleum

0.57

Correlation Coefficient

Banco De  Whiting Petroleum

Very weak diversification

The 3 months correlation between Banco and Whiting is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Banco De Chile and Whiting Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whiting Petroleum and Banco De 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 Banco De Chile 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 Banco De i.e., Banco De and Whiting Petroleum go up and down completely randomly.

Pair Corralation between Banco De and Whiting Petroleum

Considering the 90-day investment horizon Banco De Chile is expected to generate 0.1 times more return on investment than Whiting Petroleum. However, Banco De Chile is 10.43 times less risky than Whiting Petroleum. It trades about -0.08 of its potential returns per unit of risk. Whiting Petroleum is currently generating about -0.06 per unit of risk. If you would invest  2,417  in Banco De Chile on October 9, 2024 and sell it today you would lose (147.00) from holding Banco De Chile or give up 6.08% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Banco De Chile  vs.  Whiting Petroleum

Banco De Chile

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Banco De Chile has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, Banco De is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

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 abnormal performance in the last few months, the Stock's fundamental drivers remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Banco De and Whiting Petroleum

The main advantage of trading using opposite Banco De and Whiting Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco De 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 Banco De Chile 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.