Correlation Between Occidental Petroleum and FORWARD AIR
Can any of the company-specific risk be diversified away by investing in both Occidental Petroleum and FORWARD AIR 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 FORWARD AIR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Occidental Petroleum and FORWARD AIR P, you can compare the effects of market volatilities on Occidental Petroleum and FORWARD AIR 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 FORWARD AIR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Occidental Petroleum and FORWARD AIR.
Diversification Opportunities for Occidental Petroleum and FORWARD AIR
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Occidental and FORWARD is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Occidental Petroleum and FORWARD AIR P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FORWARD AIR P 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 FORWARD AIR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FORWARD AIR P has no effect on the direction of Occidental Petroleum i.e., Occidental Petroleum and FORWARD AIR go up and down completely randomly.
Pair Corralation between Occidental Petroleum and FORWARD AIR
Assuming the 90 days trading horizon Occidental Petroleum is expected to under-perform the FORWARD AIR. But the stock apears to be less risky and, when comparing its historical volatility, Occidental Petroleum is 2.65 times less risky than FORWARD AIR. The stock trades about -0.05 of its potential returns per unit of risk. The FORWARD AIR P is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,460 in FORWARD AIR P on October 26, 2024 and sell it today you would earn a total of 840.00 from holding FORWARD AIR P or generate 34.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.2% |
| Values | Daily Returns |
Occidental Petroleum vs. FORWARD AIR P
Performance |
| Timeline |
| Occidental Petroleum |
| FORWARD AIR P |
Occidental Petroleum and FORWARD AIR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Occidental Petroleum and FORWARD AIR
The main advantage of trading using opposite Occidental Petroleum and FORWARD AIR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Occidental Petroleum position performs unexpectedly, FORWARD AIR 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 FORWARD AIR will offset losses from the drop in FORWARD AIR's long position.| Occidental Petroleum vs. FORWARD AIR P | Occidental Petroleum vs. JAPAN TOBACCO UNSPADR12 | Occidental Petroleum vs. Japan Tobacco | Occidental Petroleum vs. British American Tobacco |
| FORWARD AIR vs. Safety Insurance Group | FORWARD AIR vs. Singapore Reinsurance | FORWARD AIR vs. QBE Insurance Group | FORWARD AIR vs. AWILCO DRILLING PLC |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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