Correlation Between PHX Energy and Total Energy
Can any of the company-specific risk be diversified away by investing in both PHX Energy and Total 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 Total 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 Total Energy Services, you can compare the effects of market volatilities on PHX Energy and Total 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 Total Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of PHX Energy and Total Energy.
Diversification Opportunities for PHX Energy and Total Energy
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between PHX and Total is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding PHX Energy Services and Total Energy Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Total Energy Services 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 Total Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Total Energy Services has no effect on the direction of PHX Energy i.e., PHX Energy and Total Energy go up and down completely randomly.
Pair Corralation between PHX Energy and Total Energy
Assuming the 90 days trading horizon PHX Energy Services is expected to under-perform the Total Energy. But the stock apears to be less risky and, when comparing its historical volatility, PHX Energy Services is 1.1 times less risky than Total Energy. The stock trades about -0.07 of its potential returns per unit of risk. The Total Energy Services is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 1,162 in Total Energy Services on November 18, 2024 and sell it today you would lose (39.00) from holding Total Energy Services or give up 3.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PHX Energy Services vs. Total Energy Services
Performance |
| Timeline |
| PHX Energy Services |
| Total Energy Services |
PHX Energy and Total Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PHX Energy and Total Energy
The main advantage of trading using opposite PHX Energy and Total Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PHX Energy position performs unexpectedly, Total 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 Total Energy will offset losses from the drop in Total Energy's long position.| PHX Energy vs. CES Energy Solutions | PHX Energy vs. Total Energy Services | PHX Energy vs. Western Energy Services |
| Total Energy vs. PHX Energy Services | Total Energy vs. Pason Systems | Total Energy vs. CES Energy Solutions | Total 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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