Correlation Between Phillips and Ultrapar Participacoes
Can any of the company-specific risk be diversified away by investing in both Phillips and Ultrapar Participacoes 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 Ultrapar Participacoes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Phillips 66 and Ultrapar Participacoes SA, you can compare the effects of market volatilities on Phillips and Ultrapar Participacoes 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 Ultrapar Participacoes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Phillips and Ultrapar Participacoes.
Diversification Opportunities for Phillips and Ultrapar Participacoes
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Phillips and Ultrapar is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Phillips 66 and Ultrapar Participacoes SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ultrapar Participacoes 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 Ultrapar Participacoes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ultrapar Participacoes has no effect on the direction of Phillips i.e., Phillips and Ultrapar Participacoes go up and down completely randomly.
Pair Corralation between Phillips and Ultrapar Participacoes
Considering the 90-day investment horizon Phillips 66 is expected to generate 0.72 times more return on investment than Ultrapar Participacoes. However, Phillips 66 is 1.39 times less risky than Ultrapar Participacoes. It trades about 0.04 of its potential returns per unit of risk. Ultrapar Participacoes SA is currently generating about -0.01 per unit of risk. If you would invest 10,874 in Phillips 66 on September 12, 2024 and sell it today you would earn a total of 1,655 from holding Phillips 66 or generate 15.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Phillips 66 vs. Ultrapar Participacoes SA
Performance |
| Timeline |
| Phillips 66 |
| Ultrapar Participacoes |
Phillips and Ultrapar Participacoes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Phillips and Ultrapar Participacoes
The main advantage of trading using opposite Phillips and Ultrapar Participacoes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Phillips position performs unexpectedly, Ultrapar Participacoes 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 Ultrapar Participacoes will offset losses from the drop in Ultrapar Participacoes' long position.| Phillips vs. Marathon Petroleum Corp | Phillips vs. HF Sinclair Corp | Phillips vs. PBF Energy | Phillips vs. Sunoco LP |
| Ultrapar Participacoes vs. Star Gas Partners | Ultrapar Participacoes vs. Par Pacific Holdings | Ultrapar Participacoes vs. Delek Energy | Ultrapar Participacoes vs. Crossamerica Partners 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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