Correlation Between Permian Resources and Pharos Energy
Can any of the company-specific risk be diversified away by investing in both Permian Resources and Pharos 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 Permian Resources and Pharos Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Permian Resources and Pharos Energy plc, you can compare the effects of market volatilities on Permian Resources and Pharos 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 Permian Resources with a short position of Pharos Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Permian Resources and Pharos Energy.
Diversification Opportunities for Permian Resources and Pharos Energy
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Permian and Pharos is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Permian Resources and Pharos Energy plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pharos Energy plc and Permian Resources 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 Permian Resources are associated (or correlated) with Pharos Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pharos Energy plc has no effect on the direction of Permian Resources i.e., Permian Resources and Pharos Energy go up and down completely randomly.
Pair Corralation between Permian Resources and Pharos Energy
Allowing for the 90-day total investment horizon Permian Resources is expected to generate 0.46 times more return on investment than Pharos Energy. However, Permian Resources is 2.17 times less risky than Pharos Energy. It trades about 0.38 of its potential returns per unit of risk. Pharos Energy plc is currently generating about -0.22 per unit of risk. If you would invest 1,349 in Permian Resources on September 1, 2024 and sell it today you would earn a total of 217.00 from holding Permian Resources or generate 16.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Permian Resources vs. Pharos Energy plc
Performance |
| Timeline |
| Permian Resources |
| Pharos Energy plc |
Permian Resources and Pharos Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Permian Resources and Pharos Energy
The main advantage of trading using opposite Permian Resources and Pharos Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Permian Resources position performs unexpectedly, Pharos 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 Pharos Energy will offset losses from the drop in Pharos Energy's long position.| Permian Resources vs. Devon Energy | Permian Resources vs. EOG Resources | Permian Resources vs. Coterra Energy | Permian Resources vs. Range Resources Corp |
| Pharos Energy vs. San Leon Energy | Pharos Energy vs. Enwell Energy plc | Pharos Energy vs. Dno ASA | Pharos Energy vs. PetroShale |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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