Correlation Between EOG Resources and Occidental Petroleum
Can any of the company-specific risk be diversified away by investing in both EOG Resources 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 EOG Resources and Occidental Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EOG Resources and Occidental Petroleum, you can compare the effects of market volatilities on EOG Resources 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 EOG Resources with a short position of Occidental Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of EOG Resources and Occidental Petroleum.
Diversification Opportunities for EOG Resources and Occidental Petroleum
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between EOG and Occidental is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding EOG Resources and Occidental Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Occidental Petroleum and EOG Resources 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 EOG 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 EOG Resources i.e., EOG Resources and Occidental Petroleum go up and down completely randomly.
Pair Corralation between EOG Resources and Occidental Petroleum
Considering the 90-day investment horizon EOG Resources is expected to generate 0.88 times more return on investment than Occidental Petroleum. However, EOG Resources is 1.13 times less risky than Occidental Petroleum. It trades about 0.28 of its potential returns per unit of risk. Occidental Petroleum is currently generating about 0.13 per unit of risk. If you would invest 12,380 in EOG Resources on January 19, 2024 and sell it today you would earn a total of 796.00 from holding EOG Resources or generate 6.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
EOG Resources vs. Occidental Petroleum
Performance |
| Timeline |
| EOG Resources |
| Occidental Petroleum |
EOG Resources and Occidental Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EOG Resources and Occidental Petroleum
The main advantage of trading using opposite EOG Resources and Occidental Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EOG Resources 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.| EOG Resources vs. Pioneer Natural Resources | EOG Resources vs. Permian Resources | EOG Resources vs. Devon Energy | EOG Resources vs. Coterra Energy |
| Occidental Petroleum vs. Pioneer Natural Resources | Occidental Petroleum vs. Coterra Energy | Occidental Petroleum vs. Diamondback Energy | Occidental Petroleum 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
Other Complementary Tools
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device |