Correlation Between Capricorn Energy and Occidental Petroleum
Can any of the company-specific risk be diversified away by investing in both Capricorn 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 Capricorn 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 Capricorn Energy PLC and Occidental Petroleum, you can compare the effects of market volatilities on Capricorn 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 Capricorn Energy with a short position of Occidental Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capricorn Energy and Occidental Petroleum.
Diversification Opportunities for Capricorn Energy and Occidental Petroleum
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Capricorn and Occidental is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Capricorn Energy PLC and Occidental Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Occidental Petroleum and Capricorn 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 Capricorn Energy PLC 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 Capricorn Energy i.e., Capricorn Energy and Occidental Petroleum go up and down completely randomly.
Pair Corralation between Capricorn Energy and Occidental Petroleum
Assuming the 90 days horizon Capricorn Energy PLC is expected to generate 8.02 times more return on investment than Occidental Petroleum. However, Capricorn Energy is 8.02 times more volatile than Occidental Petroleum. It trades about 0.04 of its potential returns per unit of risk. Occidental Petroleum is currently generating about 0.04 per unit of risk. If you would invest 639.00 in Capricorn Energy PLC on January 26, 2024 and sell it today you would lose (209.00) from holding Capricorn Energy PLC or give up 32.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capricorn Energy PLC vs. Occidental Petroleum
Performance |
| Timeline |
| Capricorn Energy PLC |
| Occidental Petroleum |
Capricorn Energy and Occidental Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capricorn Energy and Occidental Petroleum
The main advantage of trading using opposite Capricorn Energy and Occidental Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capricorn 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.| Capricorn Energy vs. Pioneer Natural Resources | Capricorn Energy vs. Permian Resources | Capricorn Energy vs. Devon Energy | Capricorn Energy vs. EOG Resources |
| 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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