Correlation Between Inpex Corp and Weatherford International

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

By analyzing existing cross correlation between Inpex Corp ADR and Weatherford International PLC, you can compare the effects of market volatilities on Inpex Corp and Weatherford International 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 Inpex Corp with a short position of Weatherford International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inpex Corp and Weatherford International.

Diversification Opportunities for Inpex Corp and Weatherford International

-0.67

Correlation Coefficient

Inpex Corp  Weatherford International

Excellent diversification

The 3 months correlation between Inpex and Weatherford is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Inpex Corp ADR and Weatherford International PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weatherford International and Inpex Corp 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 Inpex Corp ADR are associated (or correlated) with Weatherford International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weatherford International has no effect on the direction of Inpex Corp i.e., Inpex Corp and Weatherford International go up and down completely randomly.

Pair Corralation between Inpex Corp and Weatherford International

Assuming the 90 days horizon Inpex Corp ADR is expected to generate 0.56 times more return on investment than Weatherford International. However, Inpex Corp ADR is 1.77 times less risky than Weatherford International. It trades about 0.09 of its potential returns per unit of risk. Weatherford International PLC is currently generating about -0.13 per unit of risk. If you would invest  1,275  in Inpex Corp ADR on December 30, 2024 and sell it today you would earn a total of  114.00  from holding Inpex Corp ADR or generate 8.94% return on investment over 90 days.

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

Inpex Corp ADR  vs.  Weatherford International PLC

Inpex Corp ADR

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Inpex Corp ADR are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile technical indicators, Inpex Corp may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Weatherford International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Weatherford International PLC 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 rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Inpex Corp and Weatherford International

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

The idea behind Inpex Corp ADR and Weatherford International PLC 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.