Correlation Between Anadarko Petroleum and APA

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

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

Diversification Opportunities for Anadarko Petroleum and APA

0.0

Correlation Coefficient

Anadarko Petroleum  APA

Pay attention - limited upside

The 3 months correlation between Anadarko and APA is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Anadarko Petroleum and APA Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APA Corporation and Anadarko Petroleum 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 Anadarko Petroleum are associated (or correlated) with APA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APA Corporation has no effect on the direction of Anadarko Petroleum i.e., Anadarko Petroleum and APA go up and down completely randomly.

Pair Corralation between Anadarko Petroleum and APA

If you would invest  2,939  in APA Corporation on February 26, 2024 and sell it today you would lose (3.00) from holding APA Corporation or give up 0.1% of portfolio value over 90 days.

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

Anadarko Petroleum  vs.  APA Corp.

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 newest stock price tumult, may contribute to shorter-term losses for the shareholders.

APA Corporation

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Anadarko Petroleum and APA

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

The idea behind Anadarko Petroleum and APA Corporation 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.