Correlation Between Woodside Petroleum and Barrister Energy

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

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

Diversification Opportunities for Woodside Petroleum and Barrister Energy

-0.4

Correlation Coefficient

Woodside Petroleum  Barrister Energy

Very good diversification

The 3 months correlation between Woodside and Barrister is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Woodside Petroleum and Barrister Energy LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barrister Energy LLC 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 Barrister Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barrister Energy LLC has no effect on the direction of Woodside Petroleum i.e., Woodside Petroleum and Barrister Energy go up and down completely randomly.

Pair Corralation between Woodside Petroleum and Barrister Energy

Assuming the 90 days horizon Woodside Petroleum is expected to generate 1.26 times less return on investment than Barrister Energy. In addition to that, Woodside Petroleum is 1.06 times more volatile than Barrister Energy LLC. It trades about 0.02 of its total potential returns per unit of risk. Barrister Energy LLC is currently generating about 0.03 per unit of volatility. If you would invest  213.00  in Barrister Energy LLC on October 22, 2024 and sell it today you would earn a total of  2.00  from holding Barrister Energy LLC or generate 0.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.38%
Values	Daily Returns

Woodside Petroleum  vs.  Barrister Energy LLC

Woodside Petroleum

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Woodside Petroleum has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Woodside Petroleum is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Barrister Energy LLC

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Barrister Energy LLC are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Barrister Energy may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Woodside Petroleum and Barrister Energy

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

The idea behind Woodside Petroleum and Barrister Energy LLC 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.