Correlation Between Chord Energy and Whiting Petroleum

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

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

Diversification Opportunities for Chord Energy and Whiting Petroleum

0.74

Correlation Coefficient

Chord Energy  Whiting Petroleum

Poor diversification

The 3 months correlation between Chord and Whiting is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Chord Energy Corp and Whiting Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whiting Petroleum and Chord Energy 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 Chord Energy Corp 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 Chord Energy i.e., Chord Energy and Whiting Petroleum go up and down completely randomly.

Pair Corralation between Chord Energy and Whiting Petroleum

Given the investment horizon of 90 days Chord Energy is expected to generate 4.32 times less return on investment than Whiting Petroleum. But when comparing it to its historical volatility, Chord Energy Corp is 7.08 times less risky than Whiting Petroleum. It trades about 0.02 of its potential returns per unit of risk. Whiting Petroleum is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  285.00  in Whiting Petroleum on December 20, 2024 and sell it today you would lose (105.00) from holding Whiting Petroleum or give up 36.84% of portfolio value over 90 days.

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

Chord Energy Corp  vs.  Whiting Petroleum

Chord Energy Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Chord Energy Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Chord Energy is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Whiting Petroleum

Risk-Adjusted Performance

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 abnormal fundamental drivers, Whiting Petroleum may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Chord Energy and Whiting Petroleum

The main advantage of trading using opposite Chord Energy and Whiting Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chord Energy 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 Chord Energy Corp 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.