Correlation Between Occidental Petroleum and Crescent Point

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

By analyzing existing cross correlation between Occidental Petroleum and Crescent Point Energy, you can compare the effects of market volatilities on Occidental Petroleum and Crescent Point 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 Crescent Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of Occidental Petroleum and Crescent Point.

Diversification Opportunities for Occidental Petroleum and Crescent Point

0.5

Correlation Coefficient

Occidental Petroleum  Crescent Point

Very weak diversification

The 3 months correlation between Occidental and Crescent is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Occidental Petroleum and Crescent Point Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crescent Point Energy 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 Crescent Point. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crescent Point Energy has no effect on the direction of Occidental Petroleum i.e., Occidental Petroleum and Crescent Point go up and down completely randomly.

Pair Corralation between Occidental Petroleum and Crescent Point

If you would invest  799.00  in Crescent Point Energy on September 14, 2024 and sell it today you would earn a total of  0.00  from holding Crescent Point Energy or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	1.59%
Values	Daily Returns

Occidental Petroleum  vs.  Crescent Point Energy

Occidental Petroleum

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Occidental Petroleum has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Occidental Petroleum is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Crescent Point Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Crescent Point Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Crescent Point is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Occidental Petroleum and Crescent Point

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

The idea behind Occidental Petroleum and Crescent Point Energy 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.