Correlation Between Bristow and Whiting Petroleum

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

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

Diversification Opportunities for Bristow and Whiting Petroleum

0.43

Correlation Coefficient

Bristow  Whiting Petroleum

Very weak diversification

The 3 months correlation between Bristow and Whiting is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Bristow Group and Whiting Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whiting Petroleum and Bristow 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 Bristow Group 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 Bristow i.e., Bristow and Whiting Petroleum go up and down completely randomly.

Pair Corralation between Bristow and Whiting Petroleum

Given the investment horizon of 90 days Bristow Group is expected to under-perform the Whiting Petroleum. But the stock apears to be less risky and, when comparing its historical volatility, Bristow Group is 6.19 times less risky than Whiting Petroleum. The stock trades about 0.0 of its potential returns per unit of risk. The Whiting Petroleum is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  280.00  in Whiting Petroleum on December 21, 2024 and sell it today you would lose (100.00) from holding Whiting Petroleum or give up 35.71% of portfolio value over 90 days.

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

Bristow Group  vs.  Whiting Petroleum

Bristow Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bristow Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Bristow is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Whiting Petroleum

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Whiting Petroleum are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal fundamental drivers, Whiting Petroleum showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bristow and Whiting Petroleum

The main advantage of trading using opposite Bristow and Whiting Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bristow 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 Bristow Group 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..