Correlation Between Occidental Petroleum and Uber Technologies

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Can any of the company-specific risk be diversified away by investing in both Occidental Petroleum and Uber Technologies 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 Uber Technologies 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 Uber Technologies, you can compare the effects of market volatilities on Occidental Petroleum and Uber Technologies 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 Uber Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Occidental Petroleum and Uber Technologies.

Diversification Opportunities for Occidental Petroleum and Uber Technologies

0.18
  Correlation Coefficient

Average diversification

The 3 months correlation between Occidental and Uber Technologies is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Occidental Petroleum Corp and Uber Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uber Technologies 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 Uber Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uber Technologies has no effect on the direction of Occidental Petroleum i.e., Occidental Petroleum and Uber Technologies go up and down completely randomly.

Pair Corralation between Occidental Petroleum and Uber Technologies

Considering the 90-day investment horizon Occidental Petroleum is expected to generate 8.92 times less return on investment than Uber Technologies. But when comparing it to its historical volatility, Occidental Petroleum Corp is 1.48 times less risky than Uber Technologies. It trades about 0.07 of its potential returns per unit of risk. Uber Technologies is currently generating about 0.42 of returns per unit of risk over similar time horizon. If you would invest  2,119  in Uber Technologies on May 12, 2022 and sell it today you would earn a total of  1,135  from holding Uber Technologies or generate 53.56% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Occidental Petroleum Corp  vs.  Uber Technologies

 Performance (%) 
       Timeline  
Occidental Petroleum Corp 
Occidental Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Occidental Petroleum Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly sluggish basic indicators, Occidental Petroleum may actually be approaching a critical reversion point that can send shares even higher in September 2022.

Occidental Price Channel

Uber Technologies 
Uber Technologies Performance
10 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Uber Technologies are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively sluggish technical and fundamental indicators, Uber Technologies reported solid returns over the last few months and may actually be approaching a breakup point.

Uber Technologies Price Channel

Occidental Petroleum and Uber Technologies Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Occidental Petroleum and Uber Technologies

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

Uber Technologies

Pair trading matchups for Uber Technologies

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 Price Transformation module to use Price Transformation models to analyze depth of different equity instruments across global markets.

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