Correlation Between Barnwell Industries and Occidental Petroleum
Can any of the company-specific risk be diversified away by investing in both Barnwell Industries 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 Barnwell Industries and Occidental Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barnwell Industries and Occidental Petroleum, you can compare the effects of market volatilities on Barnwell Industries 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 Barnwell Industries with a short position of Occidental Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barnwell Industries and Occidental Petroleum.
Diversification Opportunities for Barnwell Industries and Occidental Petroleum
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Barnwell and Occidental is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Barnwell Industries and Occidental Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Occidental Petroleum and Barnwell Industries 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 Barnwell Industries 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 Barnwell Industries i.e., Barnwell Industries and Occidental Petroleum go up and down completely randomly.
Pair Corralation between Barnwell Industries and Occidental Petroleum
Considering the 90-day investment horizon Barnwell Industries is expected to under-perform the Occidental Petroleum. In addition to that, Barnwell Industries is 1.94 times more volatile than Occidental Petroleum. It trades about -0.28 of its total potential returns per unit of risk. Occidental Petroleum is currently generating about -0.01 per unit of volatility. If you would invest 5,063 in Occidental Petroleum on August 27, 2024 and sell it today you would lose (19.00) from holding Occidental Petroleum or give up 0.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barnwell Industries vs. Occidental Petroleum
Performance |
| Timeline |
| Barnwell Industries |
| Occidental Petroleum |
Barnwell Industries and Occidental Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barnwell Industries and Occidental Petroleum
The main advantage of trading using opposite Barnwell Industries and Occidental Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barnwell Industries 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.| Barnwell Industries vs. Houston American Energy | Barnwell Industries vs. Mexco Energy | Barnwell Industries vs. PHX Minerals | Barnwell Industries vs. Ring Energy |
| Occidental Petroleum vs. Coterra Energy | Occidental Petroleum vs. Diamondback Energy | Occidental Petroleum vs. ConocoPhillips | Occidental Petroleum vs. EOG Resources |
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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