Correlation Between Phillips and DCC PLC
Can any of the company-specific risk be diversified away by investing in both Phillips and DCC PLC 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 DCC PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Phillips 66 and DCC PLC ADR, you can compare the effects of market volatilities on Phillips and DCC PLC 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 DCC PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Phillips and DCC PLC.
Diversification Opportunities for Phillips and DCC PLC
Very weak diversification
The 3 months correlation between Phillips and DCC is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Phillips 66 and DCC PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DCC PLC 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 DCC PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DCC PLC ADR has no effect on the direction of Phillips i.e., Phillips and DCC PLC go up and down completely randomly.
Pair Corralation between Phillips and DCC PLC
Considering the 90-day investment horizon Phillips is expected to generate 2.76 times less return on investment than DCC PLC. In addition to that, Phillips is 9.47 times more volatile than DCC PLC ADR. It trades about 0.0 of its total potential returns per unit of risk. DCC PLC ADR is currently generating about 0.09 per unit of volatility. If you would invest 2,213 in DCC PLC ADR on September 5, 2024 and sell it today you would earn a total of 42.00 from holding DCC PLC ADR or generate 1.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Phillips 66 vs. DCC PLC ADR
Performance |
| Timeline |
| Phillips 66 |
| DCC PLC ADR |
Phillips and DCC PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Phillips and DCC PLC
The main advantage of trading using opposite Phillips and DCC PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Phillips position performs unexpectedly, DCC PLC 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 DCC PLC will offset losses from the drop in DCC PLC's long position.| Phillips vs. Marathon Petroleum Corp | Phillips vs. HF Sinclair Corp | Phillips vs. PBF Energy | Phillips vs. Sunoco LP |
| DCC PLC vs. Ultrapar Participacoes SA | DCC PLC vs. Sunoco LP | DCC PLC vs. HF Sinclair Corp | DCC PLC vs. Delek Energy |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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