Correlation Between PHX Energy and Petroleo Brasileiro
Can any of the company-specific risk be diversified away by investing in both PHX Energy and Petroleo Brasileiro 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 Petroleo Brasileiro 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 Petroleo Brasileiro Petrobras, you can compare the effects of market volatilities on PHX Energy and Petroleo Brasileiro 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 Petroleo Brasileiro. Check out your portfolio center. Please also check ongoing floating volatility patterns of PHX Energy and Petroleo Brasileiro.
Diversification Opportunities for PHX Energy and Petroleo Brasileiro
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between PHX and Petroleo is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding PHX Energy Services and Petroleo Brasileiro Petrobras in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petroleo Brasileiro 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 Petroleo Brasileiro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petroleo Brasileiro has no effect on the direction of PHX Energy i.e., PHX Energy and Petroleo Brasileiro go up and down completely randomly.
Pair Corralation between PHX Energy and Petroleo Brasileiro
Assuming the 90 days horizon PHX Energy is expected to generate 2.07 times less return on investment than Petroleo Brasileiro. In addition to that, PHX Energy is 1.81 times more volatile than Petroleo Brasileiro Petrobras. It trades about 0.07 of its total potential returns per unit of risk. Petroleo Brasileiro Petrobras is currently generating about 0.26 per unit of volatility. If you would invest 1,318 in Petroleo Brasileiro Petrobras on September 3, 2024 and sell it today you would earn a total of 110.00 from holding Petroleo Brasileiro Petrobras or generate 8.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PHX Energy Services vs. Petroleo Brasileiro Petrobras
Performance |
| Timeline |
| PHX Energy Services |
| Petroleo Brasileiro |
PHX Energy and Petroleo Brasileiro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PHX Energy and Petroleo Brasileiro
The main advantage of trading using opposite PHX Energy and Petroleo Brasileiro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PHX Energy position performs unexpectedly, Petroleo Brasileiro 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 Petroleo Brasileiro will offset losses from the drop in Petroleo Brasileiro's long position.| PHX Energy vs. Seadrill Limited | PHX Energy vs. Noble plc | PHX Energy vs. Borr Drilling | PHX Energy vs. SCOR PK |
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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