Correlation Between SandRidge Energy and Occidental Petroleum
Can any of the company-specific risk be diversified away by investing in both SandRidge Energy 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 SandRidge Energy and Occidental Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SandRidge Energy and Occidental Petroleum, you can compare the effects of market volatilities on SandRidge Energy 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 SandRidge Energy with a short position of Occidental Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of SandRidge Energy and Occidental Petroleum.
Diversification Opportunities for SandRidge Energy and Occidental Petroleum
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between SandRidge and Occidental is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding SandRidge Energy and Occidental Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Occidental Petroleum and SandRidge Energy 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 SandRidge Energy 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 SandRidge Energy i.e., SandRidge Energy and Occidental Petroleum go up and down completely randomly.
Pair Corralation between SandRidge Energy and Occidental Petroleum
Allowing for the 90-day total investment horizon SandRidge Energy is expected to generate 1.5 times more return on investment than Occidental Petroleum. However, SandRidge Energy is 1.5 times more volatile than Occidental Petroleum. It trades about 0.13 of its potential returns per unit of risk. Occidental Petroleum is currently generating about 0.02 per unit of risk. If you would invest 1,118 in SandRidge Energy on August 24, 2024 and sell it today you would earn a total of 57.00 from holding SandRidge Energy or generate 5.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SandRidge Energy vs. Occidental Petroleum
Performance |
| Timeline |
| SandRidge Energy |
| Occidental Petroleum |
SandRidge Energy and Occidental Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SandRidge Energy and Occidental Petroleum
The main advantage of trading using opposite SandRidge Energy and Occidental Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SandRidge Energy 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.| SandRidge Energy vs. Range Resources Corp | SandRidge Energy vs. SM Energy Co | SandRidge Energy vs. Northern Oil Gas |
| Occidental Petroleum vs. Coterra Energy | Occidental Petroleum vs. Diamondback Energy | Occidental Petroleum vs. ConocoPhillips | Occidental Petroleum vs. EOG Resources |
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 .
Other Complementary Tools
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. |