Correlation Between Superior Plus and Occidental Petroleum
Can any of the company-specific risk be diversified away by investing in both Superior Plus 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 Superior Plus and Occidental Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Superior Plus Corp and Occidental Petroleum, you can compare the effects of market volatilities on Superior Plus 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 Superior Plus with a short position of Occidental Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Superior Plus and Occidental Petroleum.
Diversification Opportunities for Superior Plus and Occidental Petroleum
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Superior and Occidental is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Superior Plus Corp and Occidental Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Occidental Petroleum and Superior Plus 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 Superior Plus Corp 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 has no effect on the direction of Superior Plus i.e., Superior Plus and Occidental Petroleum go up and down completely randomly.
Pair Corralation between Superior Plus and Occidental Petroleum
Assuming the 90 days horizon Superior Plus Corp is expected to under-perform the Occidental Petroleum. In addition to that, Superior Plus is 1.29 times more volatile than Occidental Petroleum. It trades about -0.02 of its total potential returns per unit of risk. Occidental Petroleum is currently generating about -0.02 per unit of volatility. If you would invest 5,325 in Occidental Petroleum on September 12, 2024 and sell it today you would lose (720.00) from holding Occidental Petroleum or give up 13.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Superior Plus Corp vs. Occidental Petroleum
Performance |
| Timeline |
| Superior Plus Corp |
| Occidental Petroleum |
Superior Plus and Occidental Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Superior Plus and Occidental Petroleum
The main advantage of trading using opposite Superior Plus and Occidental Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Superior Plus 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.| Superior Plus vs. AIR PRODCHEMICALS | Superior Plus vs. Suntory Beverage Food | Superior Plus vs. Molson Coors Beverage | Superior Plus vs. Monster Beverage Corp |
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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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