Correlation Between Occidental Petroleum and Atlassian Cls

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Can any of the company-specific risk be diversified away by investing in both Occidental Petroleum and Atlassian Cls 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 Atlassian Cls into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Occidental Petroleum Corp and Atlassian Cls A, you can compare the effects of market volatilities on Occidental Petroleum and Atlassian Cls 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 Atlassian Cls. Check out your portfolio center. Please also check ongoing floating volatility patterns of Occidental Petroleum and Atlassian Cls.

Diversification Opportunities for Occidental Petroleum and Atlassian Cls

  Correlation Coefficient

Good diversification

The 3 months correlation between Occidental and Atlassian is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Occidental Petroleum Corp and Atlassian Cls A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlassian Cls A 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 Corp are associated (or correlated) with Atlassian Cls. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlassian Cls A has no effect on the direction of Occidental Petroleum i.e., Occidental Petroleum and Atlassian Cls go up and down completely randomly.

Pair Corralation between Occidental Petroleum and Atlassian Cls

Considering the 90-day investment horizon Occidental Petroleum Corp is expected to generate 1.1 times more return on investment than Atlassian Cls. However, Occidental Petroleum is 1.1 times more volatile than Atlassian Cls A. It trades about 0.1 of its potential returns per unit of risk. Atlassian Cls A is currently generating about 0.04 per unit of risk. If you would invest  1,304  in Occidental Petroleum Corp on May 20, 2022 and sell it today you would earn a total of  4,993  from holding Occidental Petroleum Corp or generate 382.9% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
ValuesDaily Returns

Occidental Petroleum Corp  vs.  Atlassian Cls A

 Performance (%) 
Occidental Petroleum Corp 
Occidental Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Occidental Petroleum Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Occidental Petroleum is not utilizing all of its potentials. The new stock price disturbance, may contribute to short-term losses for the investors.

Occidental Price Channel

Atlassian Cls A 
Atlassian Performance
13 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Atlassian Cls A are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Atlassian Cls revealed solid returns over the last few months and may actually be approaching a breakup point.

Atlassian Price Channel

Occidental Petroleum and Atlassian Cls Volatility Contrast

   Predicted Return Density   

Pair Trading with Occidental Petroleum and Atlassian Cls

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

Atlassian Cls A

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The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against Atlassian Cls as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. Atlassian Cls' systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, Atlassian Cls' unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to Atlassian Cls A.
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.

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