Correlation Between Occidental Petroleum and Chord Energy
Can any of the company-specific risk be diversified away by investing in both Occidental Petroleum and Chord 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 Chord 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 Chord Energy Corp, you can compare the effects of market volatilities on Occidental Petroleum and Chord 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 Chord Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Occidental Petroleum and Chord Energy.
Diversification Opportunities for Occidental Petroleum and Chord Energy
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Occidental and Chord is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Occidental Petroleum and Chord Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chord Energy Corp 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 Chord Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chord Energy Corp has no effect on the direction of Occidental Petroleum i.e., Occidental Petroleum and Chord Energy go up and down completely randomly.
Pair Corralation between Occidental Petroleum and Chord Energy
Considering the 90-day investment horizon Occidental Petroleum is expected to generate 0.84 times more return on investment than Chord Energy. However, Occidental Petroleum is 1.18 times less risky than Chord Energy. It trades about -0.09 of its potential returns per unit of risk. Chord Energy Corp is currently generating about -0.13 per unit of risk. If you would invest 6,073 in Occidental Petroleum on August 28, 2024 and sell it today you would lose (1,029) from holding Occidental Petroleum or give up 16.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Occidental Petroleum vs. Chord Energy Corp
Performance |
| Timeline |
| Occidental Petroleum |
| Chord Energy Corp |
Occidental Petroleum and Chord Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Occidental Petroleum and Chord Energy
The main advantage of trading using opposite Occidental Petroleum and Chord Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Occidental Petroleum position performs unexpectedly, Chord 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 Chord Energy will offset losses from the drop in Chord Energy's long position.| Occidental Petroleum vs. Coterra Energy | Occidental Petroleum vs. Diamondback Energy | Occidental Petroleum vs. ConocoPhillips | Occidental Petroleum vs. EOG Resources |
| Chord Energy vs. ConocoPhillips | Chord Energy vs. Occidental Petroleum | Chord Energy vs. EOG Resources | Chord Energy vs. Coterra 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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