Correlation Between Phillips and Idemitsu Kosan
Can any of the company-specific risk be diversified away by investing in both Phillips and Idemitsu Kosan 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 Idemitsu Kosan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Phillips 66 and Idemitsu Kosan CoLtd, you can compare the effects of market volatilities on Phillips and Idemitsu Kosan 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 Idemitsu Kosan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Phillips and Idemitsu Kosan.
Diversification Opportunities for Phillips and Idemitsu Kosan
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Phillips and Idemitsu is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Phillips 66 and Idemitsu Kosan CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Idemitsu Kosan CoLtd 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 Idemitsu Kosan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Idemitsu Kosan CoLtd has no effect on the direction of Phillips i.e., Phillips and Idemitsu Kosan go up and down completely randomly.
Pair Corralation between Phillips and Idemitsu Kosan
Considering the 90-day investment horizon Phillips is expected to generate 1.72 times less return on investment than Idemitsu Kosan. But when comparing it to its historical volatility, Phillips 66 is 1.32 times less risky than Idemitsu Kosan. It trades about 0.04 of its potential returns per unit of risk. Idemitsu Kosan CoLtd is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 550.00 in Idemitsu Kosan CoLtd on September 2, 2024 and sell it today you would earn a total of 109.00 from holding Idemitsu Kosan CoLtd or generate 19.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Phillips 66 vs. Idemitsu Kosan CoLtd
Performance |
| Timeline |
| Phillips 66 |
| Idemitsu Kosan CoLtd |
Phillips and Idemitsu Kosan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Phillips and Idemitsu Kosan
The main advantage of trading using opposite Phillips and Idemitsu Kosan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Phillips position performs unexpectedly, Idemitsu Kosan 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 Idemitsu Kosan will offset losses from the drop in Idemitsu Kosan's long position.| Phillips vs. Marathon Petroleum Corp | Phillips vs. HF Sinclair Corp | Phillips vs. PBF Energy | Phillips vs. Sunoco LP |
| Idemitsu Kosan vs. CVR Energy | Idemitsu Kosan vs. Valero Energy | Idemitsu Kosan vs. Phillips 66 | Idemitsu Kosan vs. Marathon Petroleum Corp |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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