Correlation Between United Internet and Occidental Petroleum
Can any of the company-specific risk be diversified away by investing in both United Internet and Occidental 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 United Internet and Occidental Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Internet AG and Occidental Petroleum Corp, you can compare the effects of market volatilities on United Internet and Occidental 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 United Internet with a short position of Occidental Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Internet and Occidental Petroleum.
Diversification Opportunities for United Internet and Occidental Petroleum
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between United and Occidental is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding United Internet AG and Occidental Petroleum Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Occidental Petroleum Corp and United Internet 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 United Internet AG are associated (or correlated) with Occidental Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Occidental Petroleum Corp has no effect on the direction of United Internet i.e., United Internet and Occidental Petroleum go up and down completely randomly.
Pair Corralation between United Internet and Occidental Petroleum
Assuming the 90 days trading horizon United Internet AG is expected to generate 1.03 times more return on investment than Occidental Petroleum. However, United Internet is 1.03 times more volatile than Occidental Petroleum Corp. It trades about -0.01 of its potential returns per unit of risk. Occidental Petroleum Corp is currently generating about -0.01 per unit of risk. If you would invest 1,904 in United Internet AG on August 24, 2024 and sell it today you would lose (347.00) from holding United Internet AG or give up 18.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.8% |
| Values | Daily Returns |
United Internet AG vs. Occidental Petroleum Corp
Performance |
| Timeline |
| United Internet AG |
| Occidental Petroleum Corp |
United Internet and Occidental Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Internet and Occidental Petroleum
The main advantage of trading using opposite United Internet and Occidental Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Internet position performs unexpectedly, Occidental 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 Occidental Petroleum will offset losses from the drop in Occidental Petroleum's long position.| United Internet vs. Quadrise Plc | United Internet vs. Intuitive Investments Group | United Internet vs. European Metals Holdings | United Internet vs. Athelney Trust plc |
| Occidental Petroleum vs. Public Storage | Occidental Petroleum vs. InterContinental Hotels Group | Occidental Petroleum vs. United Internet AG | Occidental Petroleum vs. Wyndham Hotels Resorts |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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