Correlation Between Mosaic and Occidental Petroleum

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

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

Diversification Opportunities for Mosaic and Occidental Petroleum

0.43

Correlation Coefficient

Mosaic  Occidental Petroleum

Very weak diversification

The 3 months correlation between Mosaic and Occidental is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding The Mosaic and Occidental Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Occidental Petroleum and Mosaic 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 The Mosaic are associated (or correlated) with Occidental Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Occidental Petroleum has no effect on the direction of Mosaic i.e., Mosaic and Occidental Petroleum go up and down completely randomly.

Pair Corralation between Mosaic and Occidental Petroleum

Assuming the 90 days trading horizon The Mosaic is expected to generate 0.75 times more return on investment than Occidental Petroleum. However, The Mosaic is 1.34 times less risky than Occidental Petroleum. It trades about 0.24 of its potential returns per unit of risk. Occidental Petroleum is currently generating about 0.04 per unit of risk. If you would invest  53,650  in The Mosaic on April 24, 2025 and sell it today you would earn a total of  15,022  from holding The Mosaic or generate 28.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

The Mosaic  vs.  Occidental Petroleum

Mosaic

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in The Mosaic are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Mosaic showed solid returns over the last few months and may actually be approaching a breakup point.

Occidental Petroleum

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Occidental Petroleum are ranked lower than 2 (%) 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 current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Mosaic and Occidental Petroleum

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

The idea behind The Mosaic and Occidental Petroleum 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..