Correlation Between Woodside Petroleum and Civitas Resources
Can any of the company-specific risk be diversified away by investing in both Woodside Petroleum and Civitas 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 Woodside Petroleum and Civitas Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Woodside Petroleum and Civitas Resources, you can compare the effects of market volatilities on Woodside Petroleum and Civitas 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 Woodside Petroleum with a short position of Civitas Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woodside Petroleum and Civitas Resources.
Diversification Opportunities for Woodside Petroleum and Civitas Resources
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Woodside and Civitas is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Woodside Petroleum and Civitas Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Civitas Resources and Woodside 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 Woodside Petroleum are associated (or correlated) with Civitas Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Civitas Resources has no effect on the direction of Woodside Petroleum i.e., Woodside Petroleum and Civitas Resources go up and down completely randomly.
Pair Corralation between Woodside Petroleum and Civitas Resources
Assuming the 90 days horizon Woodside Petroleum is expected to generate 2.23 times more return on investment than Civitas Resources. However, Woodside Petroleum is 2.23 times more volatile than Civitas Resources. It trades about 0.04 of its potential returns per unit of risk. Civitas Resources is currently generating about -0.12 per unit of risk. If you would invest 1,657 in Woodside Petroleum on December 3, 2024 and sell it today you would earn a total of 29.00 from holding Woodside Petroleum or generate 1.75% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Woodside Petroleum vs. Civitas Resources
Performance |
Timeline |
Woodside Petroleum |
Civitas Resources |
Woodside Petroleum and Civitas Resources Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Woodside Petroleum and Civitas Resources
The main advantage of trading using opposite Woodside Petroleum and Civitas Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woodside Petroleum position performs unexpectedly, Civitas 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 Civitas Resources will offset losses from the drop in Civitas Resources' long position.Woodside Petroleum vs. Inpex Corp ADR | Woodside Petroleum vs. Falcon Oil Gas | Woodside Petroleum vs. Pantheon Resources Plc | Woodside Petroleum vs. Woodside Energy Group |
Civitas Resources vs. Magnolia Oil Gas | Civitas Resources vs. SM Energy Co | Civitas Resources vs. Range Resources Corp | Civitas Resources vs. Matador Resources |
Check out your portfolio center.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.
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