Correlation Between Occidental Petroleum and Pioneer Natural
Can any of the company-specific risk be diversified away by investing in both Occidental Petroleum and Pioneer Natural 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 Pioneer Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Occidental Petroleum and Pioneer Natural Resources, you can compare the effects of market volatilities on Occidental Petroleum and Pioneer Natural 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 Pioneer Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Occidental Petroleum and Pioneer Natural.
Diversification Opportunities for Occidental Petroleum and Pioneer Natural
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Occidental and Pioneer is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Occidental Petroleum and Pioneer Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pioneer Natural Resources 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 Pioneer Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pioneer Natural Resources has no effect on the direction of Occidental Petroleum i.e., Occidental Petroleum and Pioneer Natural go up and down completely randomly.
Pair Corralation between Occidental Petroleum and Pioneer Natural
Considering the 90-day investment horizon Occidental Petroleum is expected to under-perform the Pioneer Natural. But the stock apears to be less risky and, when comparing its historical volatility, Occidental Petroleum is 1.26 times less risky than Pioneer Natural. The stock trades about -0.02 of its potential returns per unit of risk. The Pioneer Natural Resources is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 22,061 in Pioneer Natural Resources on August 24, 2024 and sell it today you would lose (258.00) from holding Pioneer Natural Resources or give up 1.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 32.12% |
| Values | Daily Returns |
Occidental Petroleum vs. Pioneer Natural Resources
Performance |
| Timeline |
| Occidental Petroleum |
| Pioneer Natural Resources |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Occidental Petroleum and Pioneer Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Occidental Petroleum and Pioneer Natural
The main advantage of trading using opposite Occidental Petroleum and Pioneer Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Occidental Petroleum position performs unexpectedly, Pioneer Natural 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 Pioneer Natural will offset losses from the drop in Pioneer Natural's long position.| Occidental Petroleum vs. Coterra Energy | Occidental Petroleum vs. Diamondback Energy | Occidental Petroleum vs. ConocoPhillips | Occidental Petroleum vs. EOG Resources |
| Pioneer Natural vs. Coterra Energy | Pioneer Natural vs. Occidental Petroleum | Pioneer Natural vs. Diamondback Energy | Pioneer Natural vs. ConocoPhillips |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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