Correlation Between PHX Energy and Hemisphere Energy
Can any of the company-specific risk be diversified away by investing in both PHX Energy and Hemisphere 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 PHX Energy and Hemisphere Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PHX Energy Services and Hemisphere Energy, you can compare the effects of market volatilities on PHX Energy and Hemisphere 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 PHX Energy with a short position of Hemisphere Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of PHX Energy and Hemisphere Energy.
Diversification Opportunities for PHX Energy and Hemisphere Energy
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PHX and Hemisphere is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding PHX Energy Services and Hemisphere Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hemisphere Energy and PHX 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 PHX Energy Services are associated (or correlated) with Hemisphere Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hemisphere Energy has no effect on the direction of PHX Energy i.e., PHX Energy and Hemisphere Energy go up and down completely randomly.
Pair Corralation between PHX Energy and Hemisphere Energy
Assuming the 90 days trading horizon PHX Energy Services is expected to under-perform the Hemisphere Energy. In addition to that, PHX Energy is 1.75 times more volatile than Hemisphere Energy. It trades about -0.12 of its total potential returns per unit of risk. Hemisphere Energy is currently generating about 0.0 per unit of volatility. If you would invest 174.00 in Hemisphere Energy on January 14, 2025 and sell it today you would lose (1.00) from holding Hemisphere Energy or give up 0.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PHX Energy Services vs. Hemisphere Energy
Performance |
| Timeline |
| PHX Energy Services |
| Hemisphere Energy |
PHX Energy and Hemisphere Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PHX Energy and Hemisphere Energy
The main advantage of trading using opposite PHX Energy and Hemisphere Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PHX Energy position performs unexpectedly, Hemisphere 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 Hemisphere Energy will offset losses from the drop in Hemisphere Energy's long position.| PHX Energy vs. CES Energy Solutions | PHX Energy vs. Total Energy Services | PHX Energy vs. Western Energy Services |
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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