Correlation Between PHI and Northern Oil
Can any of the company-specific risk be diversified away by investing in both PHI and Northern Oil 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 PHI and Northern Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PHI Group and Northern Oil Gas, you can compare the effects of market volatilities on PHI and Northern Oil 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 PHI with a short position of Northern Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of PHI and Northern Oil.
Diversification Opportunities for PHI and Northern Oil
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PHI and Northern is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding PHI Group and Northern Oil Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Oil Gas and PHI 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 PHI Group are associated (or correlated) with Northern Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Oil Gas has no effect on the direction of PHI i.e., PHI and Northern Oil go up and down completely randomly.
Pair Corralation between PHI and Northern Oil
Given the investment horizon of 90 days PHI Group is expected to generate 19.1 times more return on investment than Northern Oil. However, PHI is 19.1 times more volatile than Northern Oil Gas. It trades about 0.15 of its potential returns per unit of risk. Northern Oil Gas is currently generating about 0.29 per unit of risk. If you would invest 0.02 in PHI Group on August 28, 2024 and sell it today you would lose (0.01) from holding PHI Group or give up 50.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PHI Group vs. Northern Oil Gas
Performance |
| Timeline |
| PHI Group |
| Northern Oil Gas |
PHI and Northern Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PHI and Northern Oil
The main advantage of trading using opposite PHI and Northern Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PHI position performs unexpectedly, Northern Oil 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 Northern Oil will offset losses from the drop in Northern Oil's long position.| PHI vs. Morgan Stanley | PHI vs. Goldman Sachs Group | PHI vs. Charles Schwab Corp | PHI vs. Interactive Brokers Group |
| Northern Oil vs. ConocoPhillips | Northern Oil vs. Occidental Petroleum | Northern Oil vs. EOG Resources | Northern Oil vs. Coterra Energy |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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