Correlation Between Occidental Petroleum and Coelacanth Energy
Can any of the company-specific risk be diversified away by investing in both Occidental Petroleum and Coelacanth Energy 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 Coelacanth Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Occidental Petroleum and Coelacanth Energy, you can compare the effects of market volatilities on Occidental Petroleum and Coelacanth Energy 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 Coelacanth Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Occidental Petroleum and Coelacanth Energy.
Diversification Opportunities for Occidental Petroleum and Coelacanth Energy
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Occidental and Coelacanth is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Occidental Petroleum and Coelacanth Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coelacanth Energy 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 Coelacanth Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coelacanth Energy has no effect on the direction of Occidental Petroleum i.e., Occidental Petroleum and Coelacanth Energy go up and down completely randomly.
Pair Corralation between Occidental Petroleum and Coelacanth Energy
Considering the 90-day investment horizon Occidental Petroleum is expected to generate 0.63 times more return on investment than Coelacanth Energy. However, Occidental Petroleum is 1.58 times less risky than Coelacanth Energy. It trades about 0.04 of its potential returns per unit of risk. Coelacanth Energy is currently generating about -0.03 per unit of risk. If you would invest 5,011 in Occidental Petroleum on September 1, 2024 and sell it today you would earn a total of 47.00 from holding Occidental Petroleum or generate 0.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Occidental Petroleum vs. Coelacanth Energy
Performance |
| Timeline |
| Occidental Petroleum |
| Coelacanth Energy |
Occidental Petroleum and Coelacanth Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Occidental Petroleum and Coelacanth Energy
The main advantage of trading using opposite Occidental Petroleum and Coelacanth Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Occidental Petroleum position performs unexpectedly, Coelacanth Energy 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 Coelacanth Energy will offset losses from the drop in Coelacanth Energy's long position.| Occidental Petroleum vs. Coterra Energy | Occidental Petroleum vs. Diamondback Energy | Occidental Petroleum vs. ConocoPhillips | Occidental Petroleum vs. EOG Resources |
| Coelacanth Energy vs. Kelt Exploration | Coelacanth Energy vs. Hemisphere Energy | Coelacanth Energy vs. Spartan Delta Corp | Coelacanth Energy vs. Headwater Exploration |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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