Correlation Between Whiting Petroleum and Permian Resources

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

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

Diversification Opportunities for Whiting Petroleum and Permian Resources

0.09

Correlation Coefficient

Whiting Petroleum  Permian Resources

Significant diversification

The 3 months correlation between Whiting and Permian is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Whiting Petroleum and Permian Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Permian Resources 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 Permian Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Permian Resources has no effect on the direction of Whiting Petroleum i.e., Whiting Petroleum and Permian Resources go up and down completely randomly.

Pair Corralation between Whiting Petroleum and Permian Resources

Assuming the 90 days horizon Whiting Petroleum is expected to generate 1.49 times less return on investment than Permian Resources. In addition to that, Whiting Petroleum is 3.52 times more volatile than Permian Resources. It trades about 0.01 of its total potential returns per unit of risk. Permian Resources is currently generating about 0.05 per unit of volatility. If you would invest  984.00  in Permian Resources on October 23, 2024 and sell it today you would earn a total of  616.00  from holding Permian Resources or generate 62.6% return on investment over 90 days.

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

Whiting Petroleum  vs.  Permian Resources

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 abnormal performance in the last few months, the Stock's fundamental drivers remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Permian Resources

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Permian Resources are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Permian Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Whiting Petroleum and Permian Resources

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

The idea behind Whiting Petroleum and Permian Resources 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.