Correlation Between PHX Minerals and ConocoPhillips

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

Diversification Opportunities for PHX Minerals and ConocoPhillips

0.13
  Correlation Coefficient

Average diversification

The 3 months correlation between PHX and ConocoPhillips is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding PHX Minerals and ConocoPhillips in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ConocoPhillips and PHX Minerals 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 PHX Minerals 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 PHX Minerals i.e., PHX Minerals and ConocoPhillips go up and down completely randomly.

Pair Corralation between PHX Minerals and ConocoPhillips

Considering the 90-day investment horizon PHX Minerals is expected to generate 1.44 times less return on investment than ConocoPhillips. In addition to that, PHX Minerals is 1.22 times more volatile than ConocoPhillips. It trades about 0.31 of its total potential returns per unit of risk. ConocoPhillips is currently generating about 0.54 per unit of volatility. If you would invest  11,161  in ConocoPhillips on December 29, 2023 and sell it today you would earn a total of  1,523  from holding ConocoPhillips or generate 13.65% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

PHX Minerals  vs.  ConocoPhillips

 Performance 
       Timeline  
PHX Minerals 

Risk-Adjusted Performance

3 of 100

 
Low
 
High
Very Weak
Compared to the overall equity markets, risk-adjusted returns on investments in PHX Minerals are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical indicators, PHX Minerals is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.
ConocoPhillips 

Risk-Adjusted Performance

9 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in ConocoPhillips are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, ConocoPhillips may actually be approaching a critical reversion point that can send shares even higher in April 2024.

PHX Minerals and ConocoPhillips Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with PHX Minerals and ConocoPhillips

The main advantage of trading using opposite PHX Minerals and ConocoPhillips positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PHX Minerals 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 PHX Minerals 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.
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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.

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