Correlation Between Occidental Petroleum and Discover Financial
Can any of the company-specific risk be diversified away by investing in both Occidental Petroleum and Discover Financial 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 Occidental Petroleum and Discover Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Occidental Petroleum and Discover Financial Services, you can compare the effects of market volatilities on Occidental Petroleum and Discover Financial 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 Occidental Petroleum with a short position of Discover Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Occidental Petroleum and Discover Financial.
Diversification Opportunities for Occidental Petroleum and Discover Financial
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Occidental and Discover is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Occidental Petroleum and Discover Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Discover Financial and Occidental Petroleum 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 Occidental Petroleum are associated (or correlated) with Discover Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Discover Financial has no effect on the direction of Occidental Petroleum i.e., Occidental Petroleum and Discover Financial go up and down completely randomly.
Pair Corralation between Occidental Petroleum and Discover Financial
Assuming the 90 days trading horizon Occidental Petroleum is expected to generate 1.23 times more return on investment than Discover Financial. However, Occidental Petroleum is 1.23 times more volatile than Discover Financial Services. It trades about 0.07 of its potential returns per unit of risk. Discover Financial Services is currently generating about 0.0 per unit of risk. If you would invest 4,758 in Occidental Petroleum on October 11, 2024 and sell it today you would earn a total of 195.00 from holding Occidental Petroleum or generate 4.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.44% |
| Values | Daily Returns |
Occidental Petroleum vs. Discover Financial Services
Performance |
| Timeline |
| Occidental Petroleum |
| Discover Financial |
Occidental Petroleum and Discover Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Occidental Petroleum and Discover Financial
The main advantage of trading using opposite Occidental Petroleum and Discover Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Occidental Petroleum position performs unexpectedly, Discover Financial 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 Discover Financial will offset losses from the drop in Discover Financial's long position.| Occidental Petroleum vs. Discover Financial Services | Occidental Petroleum vs. REVO INSURANCE SPA | Occidental Petroleum vs. Rocket Internet SE | Occidental Petroleum vs. CRISPR Therapeutics AG |
| Discover Financial vs. Xenia Hotels Resorts | Discover Financial vs. MHP Hotel AG | Discover Financial vs. Boyd Gaming | Discover Financial vs. ScanSource |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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