Correlation Between NYSE Composite and PHX Energy
Can any of the company-specific risk be diversified away by investing in both NYSE Composite 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 NYSE Composite and PHX Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and PHX Energy Services, you can compare the effects of market volatilities on NYSE Composite 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 NYSE Composite with a short position of PHX Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and PHX Energy.
Diversification Opportunities for NYSE Composite and PHX Energy
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between NYSE and PHX is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite 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 NYSE Composite 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 NYSE Composite 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 NYSE Composite i.e., NYSE Composite and PHX Energy go up and down completely randomly.
Pair Corralation between NYSE Composite and PHX Energy
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.25 times more return on investment than PHX Energy. However, NYSE Composite is 4.05 times less risky than PHX Energy. It trades about 0.24 of its potential returns per unit of risk. PHX Energy Services is currently generating about 0.02 per unit of risk. If you would invest 1,954,967 in NYSE Composite on August 28, 2024 and sell it today you would earn a total of 66,978 from holding NYSE Composite or generate 3.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. PHX Energy Services
Performance |
| Timeline |
NYSE Composite and PHX Energy Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
PHX Energy Services
Pair trading matchups for PHX Energy
Pair Trading with NYSE Composite and PHX Energy
The main advantage of trading using opposite NYSE Composite and PHX Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite 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.| NYSE Composite vs. Vita Coco | NYSE Composite vs. Franklin Wireless Corp | NYSE Composite vs. Ambev SA ADR | NYSE Composite vs. Toro Co |
| 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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