Correlation Between Phillips and NTG Nordic
Can any of the company-specific risk be diversified away by investing in both Phillips and NTG Nordic 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 NTG Nordic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Phillips 66 and NTG Nordic Transport, you can compare the effects of market volatilities on Phillips and NTG Nordic 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 NTG Nordic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Phillips and NTG Nordic.
Diversification Opportunities for Phillips and NTG Nordic
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Phillips and NTG is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Phillips 66 and NTG Nordic Transport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NTG Nordic Transport 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 NTG Nordic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NTG Nordic Transport has no effect on the direction of Phillips i.e., Phillips and NTG Nordic go up and down completely randomly.
Pair Corralation between Phillips and NTG Nordic
Assuming the 90 days horizon Phillips 66 is expected to generate 0.85 times more return on investment than NTG Nordic. However, Phillips 66 is 1.18 times less risky than NTG Nordic. It trades about 0.26 of its potential returns per unit of risk. NTG Nordic Transport is currently generating about -0.24 per unit of risk. If you would invest 10,778 in Phillips 66 on October 29, 2024 and sell it today you would earn a total of 814.00 from holding Phillips 66 or generate 7.55% 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. NTG Nordic Transport
Performance |
| Timeline |
| Phillips 66 |
| NTG Nordic Transport |
Phillips and NTG Nordic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Phillips and NTG Nordic
The main advantage of trading using opposite Phillips and NTG Nordic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Phillips position performs unexpectedly, NTG Nordic 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 NTG Nordic will offset losses from the drop in NTG Nordic's long position.| Phillips vs. Reliance Industries Limited | Phillips vs. Marathon Petroleum Corp | Phillips vs. Valero Energy | Phillips vs. Neste Oyj |
| NTG Nordic vs. PLAYTIKA HOLDING DL 01 | NTG Nordic vs. Verizon Communications | NTG Nordic vs. COMBA TELECOM SYST | NTG Nordic vs. Playa Hotels Resorts |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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