Correlation Between Mccoy Global and PHX Energy

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

By analyzing existing cross correlation between Mccoy Global and PHX Energy Services, you can compare the effects of market volatilities on Mccoy Global and PHX Energy 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 Mccoy Global with a short position of PHX Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mccoy Global and PHX Energy.

Diversification Opportunities for Mccoy Global and PHX Energy

0.4

Correlation Coefficient

Mccoy Global  PHX Energy

Very weak diversification

The 3 months correlation between Mccoy and PHX is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Mccoy Global and PHX Energy Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PHX Energy Services and Mccoy Global 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 Mccoy Global are associated (or correlated) with PHX Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PHX Energy Services has no effect on the direction of Mccoy Global i.e., Mccoy Global and PHX Energy go up and down completely randomly.

Pair Corralation between Mccoy Global and PHX Energy

Assuming the 90 days trading horizon Mccoy Global is expected to under-perform the PHX Energy. In addition to that, Mccoy Global is 3.19 times more volatile than PHX Energy Services. It trades about -0.11 of its total potential returns per unit of risk. PHX Energy Services is currently generating about -0.25 per unit of volatility. If you would invest  916.00  in PHX Energy Services on December 10, 2024 and sell it today you would lose (68.00) from holding PHX Energy Services or give up 7.42% of portfolio value over 90 days.

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

Mccoy Global  vs.  PHX Energy Services

Mccoy Global

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mccoy Global has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental drivers, Mccoy Global is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

PHX Energy Services

Risk-Adjusted Performance

Very Weak

Over the last 90 days PHX Energy Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Mccoy Global and PHX Energy

The main advantage of trading using opposite Mccoy Global and PHX Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mccoy Global position performs unexpectedly, PHX Energy 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 PHX Energy will offset losses from the drop in PHX Energy's long position.

The idea behind Mccoy Global and PHX Energy Services 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.