Correlation Between Vista Oil and Woodside Energy

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

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

Diversification Opportunities for Vista Oil and Woodside Energy

-0.5

Correlation Coefficient

Vista Oil  Woodside Energy

Very good diversification

The 3 months correlation between Vista and Woodside is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Vista Oil Gas 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 Vista Oil 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 Vista Oil Gas 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 Vista Oil i.e., Vista Oil and Woodside Energy go up and down completely randomly.

Pair Corralation between Vista Oil and Woodside Energy

Given the investment horizon of 90 days Vista Oil Gas is expected to under-perform the Woodside Energy. In addition to that, Vista Oil is 1.38 times more volatile than Woodside Energy Group. It trades about -0.06 of its total potential returns per unit of risk. Woodside Energy Group is currently generating about 0.09 per unit of volatility. If you would invest  1,540  in Woodside Energy Group on October 12, 2024 and sell it today you would earn a total of  41.00  from holding Woodside Energy Group or generate 2.66% return on investment over 90 days.

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

Vista Oil Gas  vs.  Woodside Energy Group

Vista Oil Gas

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vista Oil Gas are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Vista Oil unveiled solid returns over the last few months and may actually be approaching a breakup point.

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 latest fragile performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Vista Oil and Woodside Energy

The main advantage of trading using opposite Vista Oil and Woodside Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vista Oil 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 Vista Oil Gas 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.