Correlation Between Ford and Oasis Petroleum
Can any of the company-specific risk be diversified away by investing in both Ford and Oasis 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 Ford and Oasis Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Oasis Petroleum, you can compare the effects of market volatilities on Ford and Oasis 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 Ford with a short position of Oasis Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Oasis Petroleum.
Diversification Opportunities for Ford and Oasis Petroleum
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Ford and Oasis is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Oasis Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oasis Petroleum and Ford 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 Ford Motor are associated (or correlated) with Oasis Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oasis Petroleum has no effect on the direction of Ford i.e., Ford and Oasis Petroleum go up and down completely randomly.
Pair Corralation between Ford and Oasis Petroleum
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Oasis Petroleum. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 1.59 times less risky than Oasis Petroleum. The stock trades about 0.0 of its potential returns per unit of risk. The Oasis Petroleum is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 6,546 in Oasis Petroleum on November 2, 2024 and sell it today you would lose (1,045) from holding Oasis Petroleum or give up 15.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 90.28% |
| Values | Daily Returns |
Ford Motor vs. Oasis Petroleum
Performance |
| Timeline |
| Ford Motor |
| Oasis Petroleum |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Ford and Oasis Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Oasis Petroleum
The main advantage of trading using opposite Ford and Oasis Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Oasis 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 Oasis Petroleum will offset losses from the drop in Oasis Petroleum's long position.The idea behind Ford Motor and Oasis Petroleum 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.| Oasis Petroleum vs. NiSource | Oasis Petroleum vs. MobileSmith | Oasis Petroleum vs. Iridium Communications | Oasis Petroleum vs. Kinetik Holdings |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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