Correlation Between Granite Ridge and PHX Minerals
Can any of the company-specific risk be diversified away by investing in both Granite Ridge and PHX Minerals 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 Granite Ridge and PHX Minerals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Granite Ridge Resources and PHX Minerals, you can compare the effects of market volatilities on Granite Ridge and PHX Minerals 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 Granite Ridge with a short position of PHX Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Granite Ridge and PHX Minerals.
Diversification Opportunities for Granite Ridge and PHX Minerals
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Granite and PHX is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Granite Ridge Resources and PHX Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PHX Minerals and Granite Ridge 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 Granite Ridge Resources are associated (or correlated) with PHX Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PHX Minerals has no effect on the direction of Granite Ridge i.e., Granite Ridge and PHX Minerals go up and down completely randomly.
Pair Corralation between Granite Ridge and PHX Minerals
Given the investment horizon of 90 days Granite Ridge Resources is expected to generate 0.69 times more return on investment than PHX Minerals. However, Granite Ridge Resources is 1.45 times less risky than PHX Minerals. It trades about 0.34 of its potential returns per unit of risk. PHX Minerals is currently generating about 0.11 per unit of risk. If you would invest 591.00 in Granite Ridge Resources on August 27, 2024 and sell it today you would earn a total of 87.00 from holding Granite Ridge Resources or generate 14.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Granite Ridge Resources vs. PHX Minerals
Performance |
| Timeline |
| Granite Ridge Resources |
| PHX Minerals |
Granite Ridge and PHX Minerals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Granite Ridge and PHX Minerals
The main advantage of trading using opposite Granite Ridge and PHX Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Granite Ridge position performs unexpectedly, PHX Minerals 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 Minerals will offset losses from the drop in PHX Minerals' long position.| Granite Ridge vs. Devon Energy | Granite Ridge vs. ConocoPhillips | Granite Ridge vs. Occidental Petroleum | Granite Ridge vs. Permian Resources |
| PHX Minerals vs. Devon Energy | PHX Minerals vs. ConocoPhillips | PHX Minerals vs. Occidental Petroleum | PHX Minerals vs. Permian Resources |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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