Correlation Between Nio and Oasis Petroleum
Can any of the company-specific risk be diversified away by investing in both Nio 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 Nio and Oasis Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nio Class A and Oasis Petroleum, you can compare the effects of market volatilities on Nio 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 Nio with a short position of Oasis Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nio and Oasis Petroleum.
Diversification Opportunities for Nio and Oasis Petroleum
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nio and Oasis is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Nio Class A and Oasis Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oasis Petroleum and Nio 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 Nio Class A 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 Nio i.e., Nio and Oasis Petroleum go up and down completely randomly.
Pair Corralation between Nio and Oasis Petroleum
Considering the 90-day investment horizon Nio Class A is expected to under-perform the Oasis Petroleum. In addition to that, Nio is 1.3 times more volatile than Oasis Petroleum. It trades about -0.06 of its total potential returns per unit of risk. Oasis Petroleum is currently generating about -0.01 per unit of volatility. If you would invest 5,736 in Oasis Petroleum on August 26, 2024 and sell it today you would lose (235.00) from holding Oasis Petroleum or give up 4.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.91% |
| Values | Daily Returns |
Nio Class A vs. Oasis Petroleum
Performance |
| Timeline |
| Nio Class A |
| Oasis Petroleum |
Nio and Oasis Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nio and Oasis Petroleum
The main advantage of trading using opposite Nio and Oasis Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nio 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 Nio Class A 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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