Correlation Between PHX Minerals and Permian Resources
Can any of the company-specific risk be diversified away by investing in both PHX Minerals and Permian Resources 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 Minerals and Permian Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PHX Minerals and Permian Resources, you can compare the effects of market volatilities on PHX Minerals and Permian Resources 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 Minerals with a short position of Permian Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of PHX Minerals and Permian Resources.
Diversification Opportunities for PHX Minerals and Permian Resources
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PHX and Permian is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding PHX Minerals and Permian Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Permian Resources and PHX Minerals 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 Minerals are associated (or correlated) with Permian Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Permian Resources has no effect on the direction of PHX Minerals i.e., PHX Minerals and Permian Resources go up and down completely randomly.
Pair Corralation between PHX Minerals and Permian Resources
Considering the 90-day investment horizon PHX Minerals is expected to generate 3.33 times less return on investment than Permian Resources. But when comparing it to its historical volatility, PHX Minerals is 1.05 times less risky than Permian Resources. It trades about 0.02 of its potential returns per unit of risk. Permian Resources is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 842.00 in Permian Resources on September 4, 2024 and sell it today you would earn a total of 686.00 from holding Permian Resources or generate 81.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PHX Minerals vs. Permian Resources
Performance |
| Timeline |
| PHX Minerals |
| Permian Resources |
PHX Minerals and Permian Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PHX Minerals and Permian Resources
The main advantage of trading using opposite PHX Minerals and Permian Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PHX Minerals position performs unexpectedly, Permian Resources 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 Permian Resources will offset losses from the drop in Permian Resources' long position.| PHX Minerals vs. Evolution Petroleum | PHX Minerals vs. GeoPark | PHX Minerals vs. Granite Ridge Resources | PHX Minerals vs. California Resources Corp |
| Permian Resources vs. Evolution Petroleum | Permian Resources vs. Ring Energy | Permian Resources vs. Gran Tierra Energy | Permian Resources vs. PEDEVCO Corp |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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