Correlation Between Cathedral Energy and PHX Energy
Can any of the company-specific risk be diversified away by investing in both Cathedral Energy and PHX Energy 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 Cathedral Energy and PHX Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cathedral Energy Services and PHX Energy Services, you can compare the effects of market volatilities on Cathedral Energy and PHX Energy 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 Cathedral Energy with a short position of PHX Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cathedral Energy and PHX Energy.
Diversification Opportunities for Cathedral Energy and PHX Energy
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cathedral and PHX is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Cathedral Energy Services and PHX Energy Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PHX Energy Services and Cathedral Energy 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 Cathedral Energy Services are associated (or correlated) with PHX Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PHX Energy Services has no effect on the direction of Cathedral Energy i.e., Cathedral Energy and PHX Energy go up and down completely randomly.
Pair Corralation between Cathedral Energy and PHX Energy
Assuming the 90 days horizon Cathedral Energy Services is expected to under-perform the PHX Energy. But the pink sheet apears to be less risky and, when comparing its historical volatility, Cathedral Energy Services is 1.87 times less risky than PHX Energy. The pink sheet trades about -0.01 of its potential returns per unit of risk. The PHX Energy Services is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 474.00 in PHX Energy Services on August 25, 2024 and sell it today you would earn a total of 213.00 from holding PHX Energy Services or generate 44.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 90.73% |
| Values | Daily Returns |
Cathedral Energy Services vs. PHX Energy Services
Performance |
| Timeline |
| Cathedral Energy Services |
| PHX Energy Services |
Cathedral Energy and PHX Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cathedral Energy and PHX Energy
The main advantage of trading using opposite Cathedral Energy and PHX Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cathedral Energy position performs unexpectedly, PHX Energy 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 PHX Energy will offset losses from the drop in PHX Energy's long position.| Cathedral Energy vs. AKITA Drilling | Cathedral Energy vs. Archer Limited | Cathedral Energy vs. PHX Energy Services | Cathedral Energy vs. Seadrill Limited |
| PHX Energy vs. Archer Limited | PHX Energy vs. Cathedral Energy Services | PHX Energy vs. Noble plc | PHX Energy vs. Borr Drilling |
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 the Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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