Correlation Between Phillips and Clave Indices

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

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

Diversification Opportunities for Phillips and Clave Indices

0.1

Correlation Coefficient

Phillips  Clave Indices

Average diversification

The 3 months correlation between Phillips and Clave is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Phillips 66 and Clave Indices De in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clave Indices De and Phillips 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 Phillips 66 are associated (or correlated) with Clave Indices. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clave Indices De has no effect on the direction of Phillips i.e., Phillips and Clave Indices go up and down completely randomly.

Pair Corralation between Phillips and Clave Indices

Assuming the 90 days trading horizon Phillips 66 is expected to under-perform the Clave Indices. But the stock apears to be less risky and, when comparing its historical volatility, Phillips 66 is 1.41 times less risky than Clave Indices. The stock trades about -0.53 of its potential returns per unit of risk. The Clave Indices De is currently generating about -0.16 of returns per unit of risk over similar time horizon. If you would invest  8,696  in Clave Indices De on October 4, 2024 and sell it today you would lose (591.00) from holding Clave Indices De or give up 6.8% of portfolio value over 90 days.

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

Phillips 66  vs.  Clave Indices De

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.

Clave Indices De

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Clave Indices De has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's forward 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 Phillips and Clave Indices

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

The idea behind Phillips 66 and Clave Indices De 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.