Correlation Between Western Midstream and Newfield Exploration
Can any of the company-specific risk be diversified away by investing in both Western Midstream and Newfield Exploration 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 Newfield Exploration 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 Newfield Exploration, you can compare the effects of market volatilities on Western Midstream and Newfield Exploration 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 Newfield Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Midstream and Newfield Exploration.
Diversification Opportunities for Western Midstream and Newfield Exploration
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Western and Newfield is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Western Midstream Partners and Newfield Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newfield Exploration 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 Newfield Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newfield Exploration has no effect on the direction of Western Midstream i.e., Western Midstream and Newfield Exploration go up and down completely randomly.
Pair Corralation between Western Midstream and Newfield Exploration
If you would invest 3,378 in Western Midstream Partners on January 24, 2024 and sell it today you would earn a total of 193.00 from holding Western Midstream Partners or generate 5.71% 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. Newfield Exploration
Performance |
| Timeline |
| Western Midstream |
| Newfield Exploration |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Western Midstream and Newfield Exploration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Midstream and Newfield Exploration
The main advantage of trading using opposite Western Midstream and Newfield Exploration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Midstream position performs unexpectedly, Newfield Exploration 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 Newfield Exploration will offset losses from the drop in Newfield Exploration's long position.The idea behind Western Midstream Partners and Newfield Exploration 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.| Newfield Exploration vs. NL Industries | Newfield Exploration vs. Western Metals | Newfield Exploration vs. Avarone Metals | Newfield Exploration vs. Axalta Coating Systems |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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