Correlation Between Occidental Petroleum and Barnwell Industries
Can any of the company-specific risk be diversified away by investing in both Occidental Petroleum and Barnwell Industries 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 Barnwell Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Occidental Petroleum and Barnwell Industries, you can compare the effects of market volatilities on Occidental Petroleum and Barnwell Industries 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 Barnwell Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Occidental Petroleum and Barnwell Industries.
Diversification Opportunities for Occidental Petroleum and Barnwell Industries
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Occidental and Barnwell is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Occidental Petroleum and Barnwell Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barnwell Industries 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 Barnwell Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barnwell Industries has no effect on the direction of Occidental Petroleum i.e., Occidental Petroleum and Barnwell Industries go up and down completely randomly.
Pair Corralation between Occidental Petroleum and Barnwell Industries
Considering the 90-day investment horizon Occidental Petroleum is expected to generate 0.54 times more return on investment than Barnwell Industries. However, Occidental Petroleum is 1.85 times less risky than Barnwell Industries. It trades about -0.02 of its potential returns per unit of risk. Barnwell Industries is currently generating about -0.02 per unit of risk. If you would invest 6,115 in Occidental Petroleum on August 30, 2024 and sell it today you would lose (1,083) from holding Occidental Petroleum or give up 17.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Occidental Petroleum vs. Barnwell Industries
Performance |
| Timeline |
| Occidental Petroleum |
| Barnwell Industries |
Occidental Petroleum and Barnwell Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Occidental Petroleum and Barnwell Industries
The main advantage of trading using opposite Occidental Petroleum and Barnwell Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Occidental Petroleum position performs unexpectedly, Barnwell Industries 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 Barnwell Industries will offset losses from the drop in Barnwell Industries' long position.| Occidental Petroleum vs. Coterra Energy | Occidental Petroleum vs. Diamondback Energy | Occidental Petroleum vs. ConocoPhillips | Occidental Petroleum vs. EOG Resources |
| Barnwell Industries vs. Houston American Energy | Barnwell Industries vs. Mexco Energy | Barnwell Industries vs. PHX Minerals | Barnwell Industries vs. Ring Energy |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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