Correlation Between Marvell Technology and Phillips

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

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

Diversification Opportunities for Marvell Technology and Phillips

0.07

Correlation Coefficient

Marvell Technology  Phillips

Significant diversification

The 3 months correlation between Marvell and Phillips is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Marvell Technology and Phillips 66 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phillips 66 and Marvell Technology 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 Marvell Technology 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 Marvell Technology i.e., Marvell Technology and Phillips go up and down completely randomly.

Pair Corralation between Marvell Technology and Phillips

Assuming the 90 days trading horizon Marvell Technology is expected to generate 1.3 times more return on investment than Phillips. However, Marvell Technology is 1.3 times more volatile than Phillips 66. It trades about 0.09 of its potential returns per unit of risk. Phillips 66 is currently generating about 0.04 per unit of risk. If you would invest  2,080  in Marvell Technology on October 4, 2024 and sell it today you would earn a total of  4,805  from holding Marvell Technology or generate 231.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	66.73%
Values	Daily Returns

Marvell Technology  vs.  Phillips 66

Marvell Technology

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Marvell Technology are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Marvell Technology sustained solid returns over the last few months and may actually be approaching a breakup point.

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 weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Marvell Technology and Phillips

The main advantage of trading using opposite Marvell Technology and Phillips positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marvell Technology 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 Marvell Technology 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.