Correlation Between CES Energy and PHX Energy
Can any of the company-specific risk be diversified away by investing in both CES 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 CES 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 CES Energy Solutions and PHX Energy Services, you can compare the effects of market volatilities on CES 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 CES Energy with a short position of PHX Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of CES Energy and PHX Energy.
Diversification Opportunities for CES Energy and PHX Energy
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between CES and PHX is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding CES Energy Solutions 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 CES 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 CES Energy Solutions 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 CES Energy i.e., CES Energy and PHX Energy go up and down completely randomly.
Pair Corralation between CES Energy and PHX Energy
Assuming the 90 days trading horizon CES Energy Solutions is expected to under-perform the PHX Energy. In addition to that, CES Energy is 1.69 times more volatile than PHX Energy Services. It trades about -0.35 of its total potential returns per unit of risk. PHX Energy Services is currently generating about -0.01 per unit of volatility. If you would invest 945.00 in PHX Energy Services on November 2, 2024 and sell it today you would lose (3.00) from holding PHX Energy Services or give up 0.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CES Energy Solutions vs. PHX Energy Services
Performance |
| Timeline |
| CES Energy Solutions |
| PHX Energy Services |
CES Energy and PHX Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CES Energy and PHX Energy
The main advantage of trading using opposite CES Energy and PHX Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CES 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.| CES Energy vs. Secure Energy Services | CES Energy vs. Ensign Energy Services | CES Energy vs. Kelt Exploration | CES Energy vs. Trican Well Service |
| PHX Energy vs. CES Energy Solutions | PHX Energy vs. Total Energy Services | PHX Energy vs. Western Energy Services |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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