Correlation Between Pioneer Natural and Occidental Petroleum
Can any of the company-specific risk be diversified away by investing in both Pioneer Natural and Occidental Petroleum 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 Pioneer Natural and Occidental Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pioneer Natural Resources and Occidental Petroleum, you can compare the effects of market volatilities on Pioneer Natural and Occidental Petroleum 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 Pioneer Natural with a short position of Occidental Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pioneer Natural and Occidental Petroleum.
Diversification Opportunities for Pioneer Natural and Occidental Petroleum
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Pioneer and Occidental is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Pioneer Natural Resources and Occidental Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Occidental Petroleum and Pioneer Natural 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 Pioneer Natural Resources are associated (or correlated) with Occidental Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Occidental Petroleum has no effect on the direction of Pioneer Natural i.e., Pioneer Natural and Occidental Petroleum go up and down completely randomly.
Pair Corralation between Pioneer Natural and Occidental Petroleum
Assuming the 90 days horizon Pioneer Natural Resources is expected to under-perform the Occidental Petroleum. In addition to that, Pioneer Natural is 1.77 times more volatile than Occidental Petroleum. It trades about -0.12 of its total potential returns per unit of risk. Occidental Petroleum is currently generating about 0.11 per unit of volatility. If you would invest 4,650 in Occidental Petroleum on October 25, 2024 and sell it today you would earn a total of 166.00 from holding Occidental Petroleum or generate 3.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 88.24% |
| Values | Daily Returns |
Pioneer Natural Resources vs. Occidental Petroleum
Performance |
| Timeline |
| Pioneer Natural Resources |
| Occidental Petroleum |
Pioneer Natural and Occidental Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pioneer Natural and Occidental Petroleum
The main advantage of trading using opposite Pioneer Natural and Occidental Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pioneer Natural position performs unexpectedly, Occidental Petroleum 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 Occidental Petroleum will offset losses from the drop in Occidental Petroleum's long position.| Pioneer Natural vs. Keck Seng Investments | Pioneer Natural vs. Apollo Investment Corp | Pioneer Natural vs. JLF INVESTMENT | Pioneer Natural vs. REINET INVESTMENTS SCA |
| Occidental Petroleum vs. United States Steel | Occidental Petroleum vs. RELIANCE STEEL AL | Occidental Petroleum vs. Sumitomo Mitsui Construction | Occidental Petroleum vs. BlueScope Steel Limited |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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