Correlation Between ConocoPhillips and California Resources

Can any of the company-specific risk be diversified away by investing in both ConocoPhillips and California Resources 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 ConocoPhillips and California Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ConocoPhillips and California Resources, you can compare the effects of market volatilities on ConocoPhillips and California Resources 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 ConocoPhillips with a short position of California Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of ConocoPhillips and California Resources.

Diversification Opportunities for ConocoPhillips and California Resources

0.0

Correlation Coefficient

ConocoPhillips  California Resources

Pay attention - limited upside

The 3 months correlation between ConocoPhillips and California is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding ConocoPhillips and California Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on California Resources and ConocoPhillips 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 ConocoPhillips are associated (or correlated) with California Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of California Resources has no effect on the direction of ConocoPhillips i.e., ConocoPhillips and California Resources go up and down completely randomly.

Pair Corralation between ConocoPhillips and California Resources

If you would invest  9,633  in ConocoPhillips on December 24, 2024 and sell it today you would earn a total of  559.00  from holding ConocoPhillips or generate 5.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

ConocoPhillips  vs.  California Resources

ConocoPhillips

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ConocoPhillips are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, ConocoPhillips may actually be approaching a critical reversion point that can send shares even higher in April 2025.

California Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days California Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, California Resources is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with ConocoPhillips and California Resources

The main advantage of trading using opposite ConocoPhillips and California Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ConocoPhillips position performs unexpectedly, California Resources 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 California Resources will offset losses from the drop in California Resources' long position.

The idea behind ConocoPhillips and California Resources pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.