Correlation Between Intel and Oasis Petroleum
Can any of the company-specific risk be diversified away by investing in both Intel 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 Intel and Oasis Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Intel and Oasis Petroleum, you can compare the effects of market volatilities on Intel 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 Intel with a short position of Oasis Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intel and Oasis Petroleum.
Diversification Opportunities for Intel and Oasis Petroleum
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Intel and Oasis is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Intel and Oasis Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oasis Petroleum and Intel 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 Intel 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 Intel i.e., Intel and Oasis Petroleum go up and down completely randomly.
Pair Corralation between Intel and Oasis Petroleum
Given the investment horizon of 90 days Intel is expected to generate 0.78 times more return on investment than Oasis Petroleum. However, Intel is 1.29 times less risky than Oasis Petroleum. It trades about 0.05 of its potential returns per unit of risk. Oasis Petroleum is currently generating about -0.01 per unit of risk. If you would invest 2,354 in Intel on August 26, 2024 and sell it today you would earn a total of 96.00 from holding Intel or generate 4.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 90.91% |
| Values | Daily Returns |
Intel vs. Oasis Petroleum
Performance |
| Timeline |
| Intel |
| Oasis Petroleum |
Intel and Oasis Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Intel and Oasis Petroleum
The main advantage of trading using opposite Intel and Oasis Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intel 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 Intel 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. Copa Holdings SA | Oasis Petroleum vs. United Airlines Holdings | Oasis Petroleum vs. Delta Air Lines | Oasis Petroleum vs. SkyWest |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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