Correlation Between InterContinental and Occidental Petroleum
Can any of the company-specific risk be diversified away by investing in both InterContinental 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 InterContinental and Occidental Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between InterContinental Hotels Group and Occidental Petroleum Corp, you can compare the effects of market volatilities on InterContinental 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 InterContinental with a short position of Occidental Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of InterContinental and Occidental Petroleum.
Diversification Opportunities for InterContinental and Occidental Petroleum
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between InterContinental and Occidental is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding InterContinental Hotels Group 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 InterContinental 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 InterContinental Hotels Group 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 InterContinental i.e., InterContinental and Occidental Petroleum go up and down completely randomly.
Pair Corralation between InterContinental and Occidental Petroleum
Assuming the 90 days trading horizon InterContinental Hotels Group is expected to generate 0.56 times more return on investment than Occidental Petroleum. However, InterContinental Hotels Group is 1.79 times less risky than Occidental Petroleum. It trades about 0.13 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 455,087 in InterContinental Hotels Group on August 28, 2024 and sell it today you would earn a total of 524,913 from holding InterContinental Hotels Group or generate 115.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.79% |
| Values | Daily Returns |
InterContinental Hotels Group vs. Occidental Petroleum Corp
Performance |
| Timeline |
| InterContinental Hotels |
| Occidental Petroleum Corp |
InterContinental and Occidental Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InterContinental and Occidental Petroleum
The main advantage of trading using opposite InterContinental and Occidental Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InterContinental 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.| InterContinental vs. Chocoladefabriken Lindt Spruengli | InterContinental vs. National Atomic Co | InterContinental vs. OTP Bank Nyrt | InterContinental vs. Samsung Electronics Co |
| Occidental Petroleum vs. Bisichi Mining PLC | Occidental Petroleum vs. Scandic Hotels Group | Occidental Petroleum vs. Blackrock World Mining | Occidental Petroleum vs. Greenroc Mining 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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