Correlation Between INTERSHOP Communications and Phillips

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

By analyzing existing cross correlation between INTERSHOP Communications Aktiengesellschaft and Phillips 66, you can compare the effects of market volatilities on INTERSHOP Communications 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 INTERSHOP Communications with a short position of Phillips. Check out your portfolio center. Please also check ongoing floating volatility patterns of INTERSHOP Communications and Phillips.

Diversification Opportunities for INTERSHOP Communications and Phillips

0.13

Correlation Coefficient

INTERSHOP Communications  Phillips

Average diversification

The 3 months correlation between INTERSHOP and Phillips is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding INTERSHOP Communications Aktie and Phillips 66 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phillips 66 and INTERSHOP Communications 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 INTERSHOP Communications Aktiengesellschaft 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 INTERSHOP Communications i.e., INTERSHOP Communications and Phillips go up and down completely randomly.

Pair Corralation between INTERSHOP Communications and Phillips

Assuming the 90 days trading horizon INTERSHOP Communications is expected to generate 5.0 times less return on investment than Phillips. But when comparing it to its historical volatility, INTERSHOP Communications Aktiengesellschaft is 1.05 times less risky than Phillips. It trades about 0.08 of its potential returns per unit of risk. Phillips 66 is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest  10,604  in Phillips 66 on October 20, 2024 and sell it today you would earn a total of  1,002  from holding Phillips 66 or generate 9.45% return on investment over 90 days.

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

INTERSHOP Communications Aktie  vs.  Phillips 66

INTERSHOP Communications

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in INTERSHOP Communications Aktiengesellschaft are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, INTERSHOP Communications is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Phillips 66

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Phillips 66 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Phillips is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with INTERSHOP Communications and Phillips

The main advantage of trading using opposite INTERSHOP Communications and Phillips positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INTERSHOP Communications 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.

The idea behind INTERSHOP Communications Aktiengesellschaft and Phillips 66 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.