Correlation Between Oakley Capital and BP PLC
Can any of the company-specific risk be diversified away by investing in both Oakley Capital and BP PLC 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 Oakley Capital and BP PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oakley Capital Investments and BP PLC ADR, you can compare the effects of market volatilities on Oakley Capital and BP PLC 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 Oakley Capital with a short position of BP PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oakley Capital and BP PLC.
Diversification Opportunities for Oakley Capital and BP PLC
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Oakley and 0HKP is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Oakley Capital Investments and BP PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BP PLC ADR and Oakley Capital 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 Oakley Capital Investments are associated (or correlated) with BP PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BP PLC ADR has no effect on the direction of Oakley Capital i.e., Oakley Capital and BP PLC go up and down completely randomly.
Pair Corralation between Oakley Capital and BP PLC
Assuming the 90 days trading horizon Oakley Capital is expected to generate 6.39 times less return on investment than BP PLC. But when comparing it to its historical volatility, Oakley Capital Investments is 1.19 times less risky than BP PLC. It trades about 0.04 of its potential returns per unit of risk. BP PLC ADR is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 2,815 in BP PLC ADR on September 13, 2024 and sell it today you would earn a total of 213.00 from holding BP PLC ADR or generate 7.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Oakley Capital Investments vs. BP PLC ADR
Performance |
| Timeline |
| Oakley Capital Inves |
| BP PLC ADR |
Oakley Capital and BP PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oakley Capital and BP PLC
The main advantage of trading using opposite Oakley Capital and BP PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oakley Capital position performs unexpectedly, BP PLC 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 BP PLC will offset losses from the drop in BP PLC's long position.| Oakley Capital vs. Catalyst Media Group | Oakley Capital vs. CATLIN GROUP | Oakley Capital vs. Tamburi Investment Partners | Oakley Capital vs. Magnora ASA |
| BP PLC vs. Silvercorp Metals | BP PLC vs. CleanTech Lithium plc | BP PLC vs. Blackrock World Mining | BP PLC vs. Endeavour Mining Corp |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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