Correlation Between Strategic Investments and ConocoPhillips

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

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

Diversification Opportunities for Strategic Investments and ConocoPhillips

0.02

Correlation Coefficient

Strategic Investments  ConocoPhillips

Significant diversification

The 3 months correlation between Strategic and ConocoPhillips is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Strategic Investments AS and ConocoPhillips in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ConocoPhillips and Strategic Investments 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 Strategic Investments AS 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 Strategic Investments i.e., Strategic Investments and ConocoPhillips go up and down completely randomly.

Pair Corralation between Strategic Investments and ConocoPhillips

Assuming the 90 days horizon Strategic Investments AS is expected to generate 2.55 times more return on investment than ConocoPhillips. However, Strategic Investments is 2.55 times more volatile than ConocoPhillips. It trades about 0.02 of its potential returns per unit of risk. ConocoPhillips is currently generating about -0.08 per unit of risk. If you would invest  14.00  in Strategic Investments AS on October 4, 2024 and sell it today you would earn a total of  0.00  from holding Strategic Investments AS or generate 0.0% return on investment over 90 days.

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

Strategic Investments AS  vs.  ConocoPhillips

Strategic Investments

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Strategic Investments AS are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Strategic Investments may actually be approaching a critical reversion point that can send shares even higher in February 2025.

ConocoPhillips

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ConocoPhillips has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Strategic Investments and ConocoPhillips

The main advantage of trading using opposite Strategic Investments and ConocoPhillips positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Strategic Investments 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 Strategic Investments AS 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.