Correlation Between Occidental Petroleum and Inpex Corp
Can any of the company-specific risk be diversified away by investing in both Occidental Petroleum and Inpex Corp 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 Inpex Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Occidental Petroleum and Inpex Corp ADR, you can compare the effects of market volatilities on Occidental Petroleum and Inpex Corp 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 Inpex Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Occidental Petroleum and Inpex Corp.
Diversification Opportunities for Occidental Petroleum and Inpex Corp
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Occidental and Inpex is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Occidental Petroleum and Inpex Corp ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inpex Corp ADR 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 Inpex Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inpex Corp ADR has no effect on the direction of Occidental Petroleum i.e., Occidental Petroleum and Inpex Corp go up and down completely randomly.
Pair Corralation between Occidental Petroleum and Inpex Corp
Considering the 90-day investment horizon Occidental Petroleum is expected to under-perform the Inpex Corp. But the stock apears to be less risky and, when comparing its historical volatility, Occidental Petroleum is 1.32 times less risky than Inpex Corp. The stock trades about -0.02 of its potential returns per unit of risk. The Inpex Corp ADR is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 979.00 in Inpex Corp ADR on August 30, 2024 and sell it today you would earn a total of 298.00 from holding Inpex Corp ADR or generate 30.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Occidental Petroleum vs. Inpex Corp ADR
Performance |
| Timeline |
| Occidental Petroleum |
| Inpex Corp ADR |
Occidental Petroleum and Inpex Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Occidental Petroleum and Inpex Corp
The main advantage of trading using opposite Occidental Petroleum and Inpex Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Occidental Petroleum position performs unexpectedly, Inpex Corp 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 Inpex Corp will offset losses from the drop in Inpex Corp's long position.| Occidental Petroleum vs. Coterra Energy | Occidental Petroleum vs. Diamondback Energy | Occidental Petroleum vs. ConocoPhillips | Occidental Petroleum vs. EOG Resources |
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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