Correlation Between Weatherford International and YPF Sociedad

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

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

Diversification Opportunities for Weatherford International and YPF Sociedad

0.79

Correlation Coefficient

Weatherford International  YPF Sociedad

Poor diversification

The 3 months correlation between Weatherford and YPF is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Weatherford International PLC and YPF Sociedad Anonima in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YPF Sociedad Anonima and Weatherford International 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 Weatherford International PLC are associated (or correlated) with YPF Sociedad. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YPF Sociedad Anonima has no effect on the direction of Weatherford International i.e., Weatherford International and YPF Sociedad go up and down completely randomly.

Pair Corralation between Weatherford International and YPF Sociedad

Given the investment horizon of 90 days Weatherford International PLC is expected to under-perform the YPF Sociedad. In addition to that, Weatherford International is 1.08 times more volatile than YPF Sociedad Anonima. It trades about -0.12 of its total potential returns per unit of risk. YPF Sociedad Anonima is currently generating about -0.06 per unit of volatility. If you would invest  4,237  in YPF Sociedad Anonima on December 29, 2024 and sell it today you would lose (500.00) from holding YPF Sociedad Anonima or give up 11.8% of portfolio value over 90 days.

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

Weatherford International PLC  vs.  YPF Sociedad Anonima

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.

YPF Sociedad Anonima

Risk-Adjusted Performance

Very Weak

Over the last 90 days YPF Sociedad Anonima has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Weatherford International and YPF Sociedad

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

The idea behind Weatherford International PLC and YPF Sociedad Anonima 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.