Correlation Between Newfield Exploration and Whiting Petroleum

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Can any of the company-specific risk be diversified away by investing in both Newfield Exploration and Whiting Petroleum 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 Newfield Exploration and Whiting Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Newfield Exploration and Whiting Petroleum, you can compare the effects of market volatilities on Newfield Exploration and Whiting Petroleum 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 Newfield Exploration with a short position of Whiting Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newfield Exploration and Whiting Petroleum.

Diversification Opportunities for Newfield Exploration and Whiting Petroleum

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  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Newfield and Whiting is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Newfield Exploration and Whiting Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whiting Petroleum and Newfield Exploration 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 Newfield Exploration are associated (or correlated) with Whiting Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Whiting Petroleum has no effect on the direction of Newfield Exploration i.e., Newfield Exploration and Whiting Petroleum go up and down completely randomly.

Pair Corralation between Newfield Exploration and Whiting Petroleum

If you would invest (100.00) in Newfield Exploration on December 29, 2023 and sell it today you would earn a total of  100.00  from holding Newfield Exploration or generate -100.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

Newfield Exploration  vs.  Whiting Petroleum

 Performance 
       Timeline  
Newfield Exploration 

Risk-Adjusted Performance

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Over the last 90 days Newfield Exploration has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Newfield Exploration is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.
Whiting Petroleum 

Risk-Adjusted Performance

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High
Very Weak
Over the last 90 days Whiting Petroleum has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Whiting Petroleum is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Newfield Exploration and Whiting Petroleum Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Newfield Exploration and Whiting Petroleum

The main advantage of trading using opposite Newfield Exploration and Whiting Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newfield Exploration position performs unexpectedly, Whiting Petroleum 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 Whiting Petroleum will offset losses from the drop in Whiting Petroleum's long position.
The idea behind Newfield Exploration and Whiting Petroleum 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.

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