Correlation Between Occidental Petroleum and Public Storage
Can any of the company-specific risk be diversified away by investing in both Occidental Petroleum and Public Storage 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 Occidental Petroleum and Public Storage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Occidental Petroleum and Public Storage, you can compare the effects of market volatilities on Occidental Petroleum and Public Storage 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 Occidental Petroleum with a short position of Public Storage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Occidental Petroleum and Public Storage.
Diversification Opportunities for Occidental Petroleum and Public Storage
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Occidental and Public is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Occidental Petroleum and Public Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Public Storage and Occidental Petroleum 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 Occidental Petroleum are associated (or correlated) with Public Storage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Public Storage has no effect on the direction of Occidental Petroleum i.e., Occidental Petroleum and Public Storage go up and down completely randomly.
Pair Corralation between Occidental Petroleum and Public Storage
Assuming the 90 days trading horizon Occidental Petroleum is expected to generate 0.79 times more return on investment than Public Storage. However, Occidental Petroleum is 1.27 times less risky than Public Storage. It trades about 0.04 of its potential returns per unit of risk. Public Storage is currently generating about -0.07 per unit of risk. If you would invest 4,874 in Occidental Petroleum on October 25, 2024 and sell it today you would earn a total of 90.00 from holding Occidental Petroleum or generate 1.85% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Occidental Petroleum vs. Public Storage
Performance |
Timeline |
Occidental Petroleum |
Public Storage |
Occidental Petroleum and Public Storage Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Occidental Petroleum and Public Storage
The main advantage of trading using opposite Occidental Petroleum and Public Storage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Occidental Petroleum position performs unexpectedly, Public Storage 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 Public Storage will offset losses from the drop in Public Storage's long position.Occidental Petroleum vs. Discover Financial Services | Occidental Petroleum vs. Mitsubishi UFJ Financial | Occidental Petroleum vs. Tres Tentos Agroindustrial | Occidental Petroleum vs. Bank of America |
Public Storage vs. Mitsubishi UFJ Financial | Public Storage vs. Deutsche Bank Aktiengesellschaft | Public Storage vs. SVB Financial Group | Public Storage vs. HDFC Bank 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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