Correlation Between Weyerhaeuser and Anadarko Petroleum

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

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

Diversification Opportunities for Weyerhaeuser and Anadarko Petroleum

0.0

Correlation Coefficient

Weyerhaeuser  Anadarko Petroleum

Pay attention - limited upside

The 3 months correlation between Weyerhaeuser and Anadarko is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Weyerhaeuser and Anadarko Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anadarko Petroleum and Weyerhaeuser 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 Weyerhaeuser 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 Weyerhaeuser i.e., Weyerhaeuser and Anadarko Petroleum go up and down completely randomly.

Pair Corralation between Weyerhaeuser and Anadarko Petroleum

If you would invest (100.00) in Anadarko Petroleum on January 31, 2024 and sell it today you would earn a total of  100.00  from holding Anadarko Petroleum or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Weyerhaeuser  vs.  Anadarko Petroleum

Weyerhaeuser

Risk-Adjusted Performance

0 of 100

Very Weak

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

Anadarko Petroleum

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Weyerhaeuser and Anadarko Petroleum

The main advantage of trading using opposite Weyerhaeuser and Anadarko Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weyerhaeuser 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 Weyerhaeuser 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.

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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.