Correlation Between Whitehaven Coal and Windrock Land

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

By analyzing existing cross correlation between Whitehaven Coal Limited and Windrock Land Co, you can compare the effects of market volatilities on Whitehaven Coal and Windrock Land 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 Whitehaven Coal with a short position of Windrock Land. Check out your portfolio center. Please also check ongoing floating volatility patterns of Whitehaven Coal and Windrock Land.

Diversification Opportunities for Whitehaven Coal and Windrock Land

-0.44

Correlation Coefficient

Whitehaven Coal  Windrock Land

Very good diversification

The 3 months correlation between Whitehaven and Windrock is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Whitehaven Coal Limited and Windrock Land Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Windrock Land and Whitehaven Coal 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 Whitehaven Coal Limited are associated (or correlated) with Windrock Land. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Windrock Land has no effect on the direction of Whitehaven Coal i.e., Whitehaven Coal and Windrock Land go up and down completely randomly.

Pair Corralation between Whitehaven Coal and Windrock Land

Assuming the 90 days horizon Whitehaven Coal Limited is expected to generate 2.01 times more return on investment than Windrock Land. However, Whitehaven Coal is 2.01 times more volatile than Windrock Land Co. It trades about 0.04 of its potential returns per unit of risk. Windrock Land Co is currently generating about -0.01 per unit of risk. If you would invest  409.00  in Whitehaven Coal Limited on September 4, 2024 and sell it today you would earn a total of  20.00  from holding Whitehaven Coal Limited or generate 4.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Whitehaven Coal Limited  vs.  Windrock Land Co

Whitehaven Coal

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Whitehaven Coal Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Whitehaven Coal may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Windrock Land

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Windrock Land Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound essential indicators, Windrock Land is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Whitehaven Coal and Windrock Land

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

The idea behind Whitehaven Coal Limited and Windrock Land Co 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.