Correlation Between ENEOS Holdings and Phillips

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

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

Diversification Opportunities for ENEOS Holdings and Phillips

0.5

Correlation Coefficient

ENEOS Holdings  Phillips

Very weak diversification

The 3 months correlation between ENEOS and Phillips is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding ENEOS Holdings and Phillips 66 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phillips 66 and ENEOS Holdings 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 ENEOS Holdings 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 ENEOS Holdings i.e., ENEOS Holdings and Phillips go up and down completely randomly.

Pair Corralation between ENEOS Holdings and Phillips

Assuming the 90 days horizon ENEOS Holdings is expected to generate 0.9 times more return on investment than Phillips. However, ENEOS Holdings is 1.11 times less risky than Phillips. It trades about -0.1 of its potential returns per unit of risk. Phillips 66 is currently generating about -0.49 per unit of risk. If you would invest  490.00  in ENEOS Holdings on September 23, 2024 and sell it today you would lose (18.00) from holding ENEOS Holdings or give up 3.67% of portfolio value over 90 days.

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

ENEOS Holdings  vs.  Phillips 66

ENEOS Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

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

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 latest fragile 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 ENEOS Holdings and Phillips

The main advantage of trading using opposite ENEOS Holdings and Phillips positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ENEOS Holdings 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 ENEOS Holdings 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.