Correlation Between Micron Technology and Occidental Petroleum
Can any of the company-specific risk be diversified away by investing in both Micron 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 Micron 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 Micron Technology and Occidental Petroleum, you can compare the effects of market volatilities on Micron 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 Micron Technology with a short position of Occidental Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and Occidental Petroleum.
Diversification Opportunities for Micron Technology and Occidental Petroleum
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Micron and Occidental is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Occidental Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Occidental Petroleum and Micron 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 Micron Technology 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 Micron Technology i.e., Micron Technology and Occidental Petroleum go up and down completely randomly.
Pair Corralation between Micron Technology and Occidental Petroleum
Allowing for the 90-day total investment horizon Micron Technology is expected to under-perform the Occidental Petroleum. In addition to that, Micron Technology is 1.39 times more volatile than Occidental Petroleum. It trades about -0.12 of its total potential returns per unit of risk. Occidental Petroleum is currently generating about -0.07 per unit of volatility. If you would invest 4,758 in Occidental Petroleum on September 12, 2024 and sell it today you would lose (143.00) from holding Occidental Petroleum or give up 3.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Micron Technology vs. Occidental Petroleum
Performance |
| Timeline |
| Micron Technology |
| Occidental Petroleum |
Micron Technology and Occidental Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Micron Technology and Occidental Petroleum
The main advantage of trading using opposite Micron Technology and Occidental Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micron 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.| Micron Technology vs. NVIDIA | Micron Technology vs. Intel | Micron Technology vs. Taiwan Semiconductor Manufacturing | Micron Technology vs. Marvell Technology Group |
| Occidental Petroleum vs. GLG LIFE TECH | Occidental Petroleum vs. ZURICH INSURANCE GROUP | Occidental Petroleum vs. MSAD INSURANCE | Occidental Petroleum vs. Axcelis Technologies |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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