Correlation Between Occidental Petroleum and ConocoPhillips
Can any of the company-specific risk be diversified away by investing in both Occidental Petroleum and ConocoPhillips 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 ConocoPhillips into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Occidental Petroleum and ConocoPhillips, you can compare the effects of market volatilities on Occidental Petroleum and ConocoPhillips 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 ConocoPhillips. Check out your portfolio center. Please also check ongoing floating volatility patterns of Occidental Petroleum and ConocoPhillips.
Diversification Opportunities for Occidental Petroleum and ConocoPhillips
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Occidental and ConocoPhillips is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Occidental Petroleum and ConocoPhillips in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ConocoPhillips 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 ConocoPhillips. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ConocoPhillips has no effect on the direction of Occidental Petroleum i.e., Occidental Petroleum and ConocoPhillips go up and down completely randomly.
Pair Corralation between Occidental Petroleum and ConocoPhillips
Considering the 90-day investment horizon Occidental Petroleum is expected to under-perform the ConocoPhillips. But the stock apears to be less risky and, when comparing its historical volatility, Occidental Petroleum is 1.67 times less risky than ConocoPhillips. The stock trades about -0.01 of its potential returns per unit of risk. The ConocoPhillips is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 10,254 in ConocoPhillips on August 28, 2024 and sell it today you would earn a total of 356.00 from holding ConocoPhillips or generate 3.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Occidental Petroleum vs. ConocoPhillips
Performance |
| Timeline |
| Occidental Petroleum |
| ConocoPhillips |
Occidental Petroleum and ConocoPhillips Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Occidental Petroleum and ConocoPhillips
The main advantage of trading using opposite Occidental Petroleum and ConocoPhillips positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Occidental Petroleum position performs unexpectedly, ConocoPhillips 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 ConocoPhillips will offset losses from the drop in ConocoPhillips' long position.| Occidental Petroleum vs. Coterra Energy | Occidental Petroleum vs. Diamondback Energy | Occidental Petroleum vs. ConocoPhillips | Occidental Petroleum vs. EOG Resources |
| ConocoPhillips vs. Diamondback Energy | ConocoPhillips vs. APA Corporation | ConocoPhillips vs. Hess Corporation | ConocoPhillips 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 Stocks Directory module to find actively traded stocks across global markets.
Other Complementary Tools
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities |