Correlation Between Vitesse Energy and Woodside Energy

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

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

Diversification Opportunities for Vitesse Energy and Woodside Energy

-0.39

Correlation Coefficient

Vitesse Energy  Woodside Energy

Very good diversification

The 3 months correlation between Vitesse and Woodside is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Vitesse Energy and Woodside Energy Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woodside Energy Group and Vitesse Energy 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 Vitesse Energy are associated (or correlated) with Woodside Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woodside Energy Group has no effect on the direction of Vitesse Energy i.e., Vitesse Energy and Woodside Energy go up and down completely randomly.

Pair Corralation between Vitesse Energy and Woodside Energy

Considering the 90-day investment horizon Vitesse Energy is expected to generate 0.77 times more return on investment than Woodside Energy. However, Vitesse Energy is 1.3 times less risky than Woodside Energy. It trades about 0.15 of its potential returns per unit of risk. Woodside Energy Group is currently generating about -0.04 per unit of risk. If you would invest  2,407  in Vitesse Energy on September 13, 2024 and sell it today you would earn a total of  349.00  from holding Vitesse Energy or generate 14.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Vitesse Energy  vs.  Woodside Energy Group

Vitesse Energy

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vitesse Energy are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Vitesse Energy unveiled solid returns over the last few months and may actually be approaching a breakup point.

Woodside Energy Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Woodside Energy Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Woodside Energy is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Vitesse Energy and Woodside Energy

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

The idea behind Vitesse Energy and Woodside Energy Group 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.