Correlation Between Hess and WT Offshore

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

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

Diversification Opportunities for Hess and WT Offshore

0.37

Correlation Coefficient

Hess  WT Offshore

Weak diversification

The 3 months correlation between Hess and WTI is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Hess Corp. and WT Offshore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WT Offshore and Hess 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 Hess Corporation are associated (or correlated) with WT Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WT Offshore has no effect on the direction of Hess i.e., Hess and WT Offshore go up and down completely randomly.

Pair Corralation between Hess and WT Offshore

Considering the 90-day investment horizon Hess Corporation is expected to generate 0.33 times more return on investment than WT Offshore. However, Hess Corporation is 3.03 times less risky than WT Offshore. It trades about -0.08 of its potential returns per unit of risk. WT Offshore is currently generating about -0.19 per unit of risk. If you would invest  14,206  in Hess Corporation on October 7, 2024 and sell it today you would lose (567.00) from holding Hess Corporation or give up 3.99% of portfolio value over 90 days.

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

Hess Corp.  vs.  WT Offshore

Hess

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hess Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Hess is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

WT Offshore

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WT Offshore has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Hess and WT Offshore

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

The idea behind Hess Corporation and WT Offshore 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.