Correlation Between ConocoPhillips and Pacific Funds

Can any of the company-specific risk be diversified away by investing in both ConocoPhillips and Pacific Funds 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 ConocoPhillips and Pacific Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ConocoPhillips and Pacific Funds Floating, you can compare the effects of market volatilities on ConocoPhillips and Pacific Funds 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 ConocoPhillips with a short position of Pacific Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of ConocoPhillips and Pacific Funds.

Diversification Opportunities for ConocoPhillips and Pacific Funds

0.77

Correlation Coefficient

ConocoPhillips  Pacific Funds

Poor diversification

The 3 months correlation between ConocoPhillips and Pacific is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding ConocoPhillips and Pacific Funds Floating in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacific Funds Floating and ConocoPhillips 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 ConocoPhillips are associated (or correlated) with Pacific Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacific Funds Floating has no effect on the direction of ConocoPhillips i.e., ConocoPhillips and Pacific Funds go up and down completely randomly.

Pair Corralation between ConocoPhillips and Pacific Funds

Considering the 90-day investment horizon ConocoPhillips is expected to generate 7.0 times more return on investment than Pacific Funds. However, ConocoPhillips is 7.0 times more volatile than Pacific Funds Floating. It trades about 0.15 of its potential returns per unit of risk. Pacific Funds Floating is currently generating about 0.22 per unit of risk. If you would invest  11,525  in ConocoPhillips on February 10, 2024 and sell it today you would earn a total of  814.00  from holding ConocoPhillips or generate 7.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

ConocoPhillips  vs.  Pacific Funds Floating

ConocoPhillips

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ConocoPhillips are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, ConocoPhillips may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pacific Funds Floating

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pacific Funds Floating are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Pacific Funds is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with ConocoPhillips and Pacific Funds

The main advantage of trading using opposite ConocoPhillips and Pacific Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ConocoPhillips position performs unexpectedly, Pacific Funds 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 Pacific Funds will offset losses from the drop in Pacific Funds' long position.

The idea behind ConocoPhillips and Pacific Funds Floating pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.