Correlation Between TRON and Woodside Energy

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

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

Diversification Opportunities for TRON and Woodside Energy

0.09

Correlation Coefficient

TRON  Woodside Energy

Significant diversification

The 3 months correlation between TRON and Woodside is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding TRON 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 TRON 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 TRON 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 TRON i.e., TRON and Woodside Energy go up and down completely randomly.

Pair Corralation between TRON and Woodside Energy

Assuming the 90 days trading horizon TRON is expected to generate 9.24 times more return on investment than Woodside Energy. However, TRON is 9.24 times more volatile than Woodside Energy Group. It trades about 0.09 of its potential returns per unit of risk. Woodside Energy Group is currently generating about 0.05 per unit of risk. If you would invest  17.00  in TRON on October 26, 2024 and sell it today you would earn a total of  8.00  from holding TRON or generate 47.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

TRON  vs.  Woodside Energy Group

TRON

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in TRON are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, TRON exhibited solid returns over the last few months and may actually be approaching a breakup point.

Woodside Energy Group

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Woodside Energy Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Woodside Energy is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with TRON and Woodside Energy

The main advantage of trading using opposite TRON and Woodside Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TRON 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 TRON 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.

Check out your portfolio center.

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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.