Correlation Between Digilife Technologies and Phillips

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

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

Diversification Opportunities for Digilife Technologies and Phillips

0.03

Correlation Coefficient

Digilife Technologies  Phillips

Significant diversification

The 3 months correlation between Digilife and Phillips is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Digilife Technologies Limited and Phillips 66 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phillips 66 and Digilife Technologies 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 Digilife Technologies Limited 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 Digilife Technologies i.e., Digilife Technologies and Phillips go up and down completely randomly.

Pair Corralation between Digilife Technologies and Phillips

Assuming the 90 days trading horizon Digilife Technologies Limited is expected to under-perform the Phillips. In addition to that, Digilife Technologies is 3.0 times more volatile than Phillips 66. It trades about -0.01 of its total potential returns per unit of risk. Phillips 66 is currently generating about -0.01 per unit of volatility. If you would invest  11,410  in Phillips 66 on September 28, 2024 and sell it today you would lose (774.00) from holding Phillips 66 or give up 6.78% of portfolio value over 90 days.

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

Digilife Technologies Limited  vs.  Phillips 66

Digilife Technologies

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Digilife Technologies Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Digilife Technologies may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 Digilife Technologies and Phillips

The main advantage of trading using opposite Digilife Technologies and Phillips positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digilife Technologies 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 Digilife Technologies Limited 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.