Correlation Between PHX Minerals and SilverBow Resources

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Can any of the company-specific risk be diversified away by investing in both PHX Minerals and SilverBow 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 SilverBow 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 SilverBow Resources, you can compare the effects of market volatilities on PHX Minerals and SilverBow 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 SilverBow Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of PHX Minerals and SilverBow Resources.

Diversification Opportunities for PHX Minerals and SilverBow Resources

-0.31
  Correlation Coefficient

Very good diversification

The 3 months correlation between PHX and SilverBow is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding PHX Minerals and SilverBow Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SilverBow 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 SilverBow Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SilverBow Resources has no effect on the direction of PHX Minerals i.e., PHX Minerals and SilverBow Resources go up and down completely randomly.

Pair Corralation between PHX Minerals and SilverBow Resources

Considering the 90-day investment horizon PHX Minerals is expected to generate 0.41 times more return on investment than SilverBow Resources. However, PHX Minerals is 2.44 times less risky than SilverBow Resources. It trades about 0.03 of its potential returns per unit of risk. SilverBow Resources is currently generating about -0.02 per unit of risk. If you would invest  324.00  in PHX Minerals on August 27, 2024 and sell it today you would earn a total of  57.00  from holding PHX Minerals or generate 17.59% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy83.47%
ValuesDaily Returns

PHX Minerals  vs.  SilverBow Resources

 Performance 
       Timeline  
PHX Minerals 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in PHX Minerals are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating technical indicators, PHX Minerals showed solid returns over the last few months and may actually be approaching a breakup point.
SilverBow Resources 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days SilverBow Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, SilverBow Resources is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

PHX Minerals and SilverBow Resources Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with PHX Minerals and SilverBow Resources

The main advantage of trading using opposite PHX Minerals and SilverBow Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PHX Minerals position performs unexpectedly, SilverBow 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 SilverBow Resources will offset losses from the drop in SilverBow Resources' long position.
The idea behind PHX Minerals and SilverBow Resources pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.

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