Correlation Between Barnwell Industries and Woodside Energy

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

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

Diversification Opportunities for Barnwell Industries and Woodside Energy

0.89

Correlation Coefficient

Barnwell Industries  Woodside Energy

Very poor diversification

The 3 months correlation between Barnwell and Woodside is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Barnwell Industries 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 Barnwell Industries 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 Barnwell Industries 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 Barnwell Industries i.e., Barnwell Industries and Woodside Energy go up and down completely randomly.

Pair Corralation between Barnwell Industries and Woodside Energy

Considering the 90-day investment horizon Barnwell Industries is expected to under-perform the Woodside Energy. In addition to that, Barnwell Industries is 1.7 times more volatile than Woodside Energy Group. It trades about -0.17 of its total potential returns per unit of risk. Woodside Energy Group is currently generating about -0.1 per unit of volatility. If you would invest  1,615  in Woodside Energy Group on September 24, 2024 and sell it today you would lose (134.00) from holding Woodside Energy Group or give up 8.3% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Barnwell Industries  vs.  Woodside Energy Group

Barnwell Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Barnwell Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Woodside Energy Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Woodside Energy Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Barnwell Industries and Woodside Energy

The main advantage of trading using opposite Barnwell Industries and Woodside Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barnwell Industries 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 Barnwell Industries 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.