OXY and OIH have a correlation of 0.81. Notice the similarities between the two graphically, below.
Is OXY 'forecasting' where OIH is heading, with regards to its long-term trendline?
How would it work to buy OXY while shorting OIH?
Pairs trading is a popular strategy that can be quite lucrative, even though I don't recommend trying it with options. If you'd like to learn more and play around with this concept check out a spreadsheet I developed here: http://www.strategicmodeling.com/Models.htm
Scroll down to 'Correlation Analysis' and click the icon.
Is OXY 'forecasting' where OIH is heading, with regards to its long-term trendline?
How would it work to buy OXY while shorting OIH?
Pairs trading is a popular strategy that can be quite lucrative, even though I don't recommend trying it with options. If you'd like to learn more and play around with this concept check out a spreadsheet I developed here: http://www.strategicmodeling.com/Models.htm
Scroll down to 'Correlation Analysis' and click the icon.
OXY (click graph to englarge)
OIH (click graph to englarge)
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