Correlation Between FactSet Research and ConocoPhillips

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Can any of the company-specific risk be diversified away by investing in both FactSet Research and ConocoPhillips 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 FactSet Research and ConocoPhillips into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FactSet Research Systems and ConocoPhillips, you can compare the effects of market volatilities on FactSet Research and ConocoPhillips 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 FactSet Research with a short position of ConocoPhillips. Check out your portfolio center. Please also check ongoing floating volatility patterns of FactSet Research and ConocoPhillips.

Diversification Opportunities for FactSet Research and ConocoPhillips

-0.19
  Correlation Coefficient

Good diversification

The 3 months correlation between FactSet and ConocoPhillips is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding FactSet Research Systems and ConocoPhillips in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ConocoPhillips and FactSet Research 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 FactSet Research Systems are associated (or correlated) with ConocoPhillips. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ConocoPhillips has no effect on the direction of FactSet Research i.e., FactSet Research and ConocoPhillips go up and down completely randomly.

Pair Corralation between FactSet Research and ConocoPhillips

Considering the 90-day investment horizon FactSet Research Systems is expected to under-perform the ConocoPhillips. In addition to that, FactSet Research is 1.7 times more volatile than ConocoPhillips. It trades about -0.05 of its total potential returns per unit of risk. ConocoPhillips is currently generating about 0.54 per unit of volatility. If you would invest  11,204  in ConocoPhillips on December 30, 2023 and sell it today you would earn a total of  1,524  from holding ConocoPhillips or generate 13.6% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

FactSet Research Systems  vs.  ConocoPhillips

 Performance 
       Timeline  
FactSet Research Systems 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days FactSet Research Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, FactSet Research is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.
ConocoPhillips 

Risk-Adjusted Performance

8 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in ConocoPhillips are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, ConocoPhillips may actually be approaching a critical reversion point that can send shares even higher in April 2024.

FactSet Research and ConocoPhillips Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with FactSet Research and ConocoPhillips

The main advantage of trading using opposite FactSet Research and ConocoPhillips positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FactSet Research position performs unexpectedly, ConocoPhillips 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 ConocoPhillips will offset losses from the drop in ConocoPhillips' long position.
The idea behind FactSet Research Systems and ConocoPhillips 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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