Correlation Between Whiting Petroleum and Chord Energy

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

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

Diversification Opportunities for Whiting Petroleum and Chord Energy

0.8

Correlation Coefficient

Whiting Petroleum  Chord Energy

Very poor diversification

The 3 months correlation between Whiting and Chord is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Whiting Petroleum and Chord Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chord Energy Corp and Whiting Petroleum 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 Whiting Petroleum are associated (or correlated) with Chord Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chord Energy Corp has no effect on the direction of Whiting Petroleum i.e., Whiting Petroleum and Chord Energy go up and down completely randomly.

Pair Corralation between Whiting Petroleum and Chord Energy

Assuming the 90 days horizon Whiting Petroleum is expected to generate 5.15 times more return on investment than Chord Energy. However, Whiting Petroleum is 5.15 times more volatile than Chord Energy Corp. It trades about 0.0 of its potential returns per unit of risk. Chord Energy Corp is currently generating about -0.01 per unit of risk. If you would invest  1,585  in Whiting Petroleum on October 24, 2024 and sell it today you would lose (1,145) from holding Whiting Petroleum or give up 72.24% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.74%
Values	Daily Returns

Whiting Petroleum  vs.  Chord Energy Corp

Whiting Petroleum

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Whiting Petroleum has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental drivers, Whiting Petroleum is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Chord Energy Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chord Energy Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Chord Energy is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Whiting Petroleum and Chord Energy

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

The idea behind Whiting Petroleum and Chord Energy Corp 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 Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..