Correlation Between Western Midstream and Anadarko Petroleum
Can any of the company-specific risk be diversified away by investing in both Western Midstream and Anadarko 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 Western Midstream and Anadarko Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Midstream Partners and Anadarko Petroleum, you can compare the effects of market volatilities on Western Midstream and Anadarko 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 Western Midstream with a short position of Anadarko Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Midstream and Anadarko Petroleum.
Diversification Opportunities for Western Midstream and Anadarko Petroleum
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Western and Anadarko is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Western Midstream Partners and Anadarko Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anadarko Petroleum and Western Midstream 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 Western Midstream Partners are associated (or correlated) with Anadarko Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anadarko Petroleum has no effect on the direction of Western Midstream i.e., Western Midstream and Anadarko Petroleum go up and down completely randomly.
Pair Corralation between Western Midstream and Anadarko Petroleum
If you would invest 2,064 in Western Midstream Partners on January 25, 2024 and sell it today you would earn a total of 1,530 from holding Western Midstream Partners or generate 74.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Western Midstream Partners vs. Anadarko Petroleum
Performance |
| Timeline |
| Western Midstream |
| Anadarko Petroleum |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Western Midstream and Anadarko Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Midstream and Anadarko Petroleum
The main advantage of trading using opposite Western Midstream and Anadarko Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Midstream position performs unexpectedly, Anadarko 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 Anadarko Petroleum will offset losses from the drop in Anadarko Petroleum's long position.The idea behind Western Midstream Partners and Anadarko 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.| Anadarko Petroleum vs. Eastman Chemical | Anadarko Petroleum vs. Cadence Design Systems | Anadarko Petroleum vs. CF Industries Holdings | Anadarko Petroleum vs. Sensient Technologies |
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 AI Investment Finder module to use AI to screen and filter profitable investment opportunities.
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