Correlation Between Microchip Technology and Occidental Petroleum
Can any of the company-specific risk be diversified away by investing in both Microchip Technology 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 Microchip Technology and Occidental Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microchip Technology Incorporated and Occidental Petroleum, you can compare the effects of market volatilities on Microchip Technology 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 Microchip Technology with a short position of Occidental Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microchip Technology and Occidental Petroleum.
Diversification Opportunities for Microchip Technology and Occidental Petroleum
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Microchip and Occidental is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Microchip Technology Incorpora and Occidental Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Occidental Petroleum and Microchip Technology 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 Microchip Technology Incorporated 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 Microchip Technology i.e., Microchip Technology and Occidental Petroleum go up and down completely randomly.
Pair Corralation between Microchip Technology and Occidental Petroleum
Assuming the 90 days trading horizon Microchip Technology Incorporated is expected to under-perform the Occidental Petroleum. In addition to that, Microchip Technology is 1.26 times more volatile than Occidental Petroleum. It trades about -0.08 of its total potential returns per unit of risk. Occidental Petroleum is currently generating about -0.09 per unit of volatility. If you would invest 5,005 in Occidental Petroleum on October 30, 2024 and sell it today you would lose (149.00) from holding Occidental Petroleum or give up 2.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microchip Technology Incorpora vs. Occidental Petroleum
Performance |
| Timeline |
| Microchip Technology |
| Occidental Petroleum |
Microchip Technology and Occidental Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microchip Technology and Occidental Petroleum
The main advantage of trading using opposite Microchip Technology and Occidental Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microchip Technology 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.| Microchip Technology vs. Hospital Mater Dei | Microchip Technology vs. Automatic Data Processing | Microchip Technology vs. Bemobi Mobile Tech | Microchip Technology vs. Molson Coors Beverage |
| Occidental Petroleum vs. Brpr Corporate Offices | Occidental Petroleum vs. CM Hospitalar SA | Occidental Petroleum vs. Zoom Video Communications | Occidental Petroleum vs. Metalurgica Gerdau SA |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. |