Correlation Between Occidental Petroleum and Sabre Insurance
Can any of the company-specific risk be diversified away by investing in both Occidental Petroleum and Sabre Insurance 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 Occidental Petroleum and Sabre Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Occidental Petroleum Corp and Sabre Insurance Group, you can compare the effects of market volatilities on Occidental Petroleum and Sabre Insurance 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 Occidental Petroleum with a short position of Sabre Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Occidental Petroleum and Sabre Insurance.
Diversification Opportunities for Occidental Petroleum and Sabre Insurance
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Occidental and Sabre is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Occidental Petroleum Corp and Sabre Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sabre Insurance Group and Occidental 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 Occidental Petroleum Corp are associated (or correlated) with Sabre Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sabre Insurance Group has no effect on the direction of Occidental Petroleum i.e., Occidental Petroleum and Sabre Insurance go up and down completely randomly.
Pair Corralation between Occidental Petroleum and Sabre Insurance
Assuming the 90 days trading horizon Occidental Petroleum Corp is expected to generate 0.71 times more return on investment than Sabre Insurance. However, Occidental Petroleum Corp is 1.41 times less risky than Sabre Insurance. It trades about 0.03 of its potential returns per unit of risk. Sabre Insurance Group is currently generating about -0.05 per unit of risk. If you would invest 5,120 in Occidental Petroleum Corp on August 24, 2024 and sell it today you would earn a total of 45.00 from holding Occidental Petroleum Corp or generate 0.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Occidental Petroleum Corp vs. Sabre Insurance Group
Performance |
| Timeline |
| Occidental Petroleum Corp |
| Sabre Insurance Group |
Occidental Petroleum and Sabre Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Occidental Petroleum and Sabre Insurance
The main advantage of trading using opposite Occidental Petroleum and Sabre Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Occidental Petroleum position performs unexpectedly, Sabre Insurance 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 Sabre Insurance will offset losses from the drop in Sabre Insurance's long position.| Occidental Petroleum vs. Public Storage | Occidental Petroleum vs. InterContinental Hotels Group | Occidental Petroleum vs. United Internet AG | Occidental Petroleum vs. Wyndham Hotels Resorts |
| Sabre Insurance vs. Verizon Communications | Sabre Insurance vs. Zegona Communications Plc | Sabre Insurance vs. National Beverage Corp | Sabre Insurance vs. Gamma Communications PLC |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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