Correlation Between Phillips and Ampol
Can any of the company-specific risk be diversified away by investing in both Phillips and Ampol 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 Phillips and Ampol into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Phillips 66 and Ampol Ltd ADR, you can compare the effects of market volatilities on Phillips and Ampol 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 Phillips with a short position of Ampol. Check out your portfolio center. Please also check ongoing floating volatility patterns of Phillips and Ampol.
Diversification Opportunities for Phillips and Ampol
Very weak diversification
The 3 months correlation between Phillips and Ampol is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Phillips 66 and Ampol Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ampol Ltd ADR and Phillips 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 Phillips 66 are associated (or correlated) with Ampol. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ampol Ltd ADR has no effect on the direction of Phillips i.e., Phillips and Ampol go up and down completely randomly.
Pair Corralation between Phillips and Ampol
Considering the 90-day investment horizon Phillips 66 is expected to generate 0.61 times more return on investment than Ampol. However, Phillips 66 is 1.65 times less risky than Ampol. It trades about -0.03 of its potential returns per unit of risk. Ampol Ltd ADR is currently generating about -0.09 per unit of risk. If you would invest 12,682 in Phillips 66 on September 12, 2024 and sell it today you would lose (149.00) from holding Phillips 66 or give up 1.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Phillips 66 vs. Ampol Ltd ADR
Performance |
| Timeline |
| Phillips 66 |
| Ampol Ltd ADR |
Phillips and Ampol Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Phillips and Ampol
The main advantage of trading using opposite Phillips and Ampol positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Phillips position performs unexpectedly, Ampol 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 Ampol will offset losses from the drop in Ampol's long position.| Phillips vs. Marathon Petroleum Corp | Phillips vs. HF Sinclair Corp | Phillips vs. PBF Energy | Phillips vs. Sunoco LP |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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