Correlation Between STAG Industrial, and Phillips
Can any of the company-specific risk be diversified away by investing in both STAG Industrial, and Phillips 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 STAG Industrial, and Phillips into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STAG Industrial, and Phillips 66, you can compare the effects of market volatilities on STAG Industrial, and Phillips 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 STAG Industrial, with a short position of Phillips. Check out your portfolio center. Please also check ongoing floating volatility patterns of STAG Industrial, and Phillips.
Diversification Opportunities for STAG Industrial, and Phillips
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between STAG and Phillips is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding STAG Industrial, and Phillips 66 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phillips 66 and STAG Industrial, 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 STAG Industrial, are associated (or correlated) with Phillips. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phillips 66 has no effect on the direction of STAG Industrial, i.e., STAG Industrial, and Phillips go up and down completely randomly.
Pair Corralation between STAG Industrial, and Phillips
Assuming the 90 days trading horizon STAG Industrial, is expected to generate 2.4 times less return on investment than Phillips. But when comparing it to its historical volatility, STAG Industrial, is 1.47 times less risky than Phillips. It trades about 0.03 of its potential returns per unit of risk. Phillips 66 is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 26,800 in Phillips 66 on October 11, 2024 and sell it today you would earn a total of 8,585 from holding Phillips 66 or generate 32.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 66.94% |
| Values | Daily Returns |
STAG Industrial, vs. Phillips 66
Performance |
| Timeline |
| STAG Industrial, |
| Phillips 66 |
STAG Industrial, and Phillips Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STAG Industrial, and Phillips
The main advantage of trading using opposite STAG Industrial, and Phillips positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STAG Industrial, position performs unexpectedly, Phillips 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 Phillips will offset losses from the drop in Phillips' long position.| STAG Industrial, vs. Applied Materials, | STAG Industrial, vs. Unity Software | STAG Industrial, vs. Molson Coors Beverage | STAG Industrial, vs. Eastman Chemical |
| Phillips vs. Marfrig Global Foods | Phillips vs. STMicroelectronics NV | Phillips vs. Fresenius Medical Care | Phillips vs. DXC Technology |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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