Correlation Between Phillips and G2D Investments

Can any of the company-specific risk be diversified away by investing in both Phillips and G2D Investments 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 G2D Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Phillips 66 and G2D Investments, you can compare the effects of market volatilities on Phillips and G2D Investments 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 G2D Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Phillips and G2D Investments.

Diversification Opportunities for Phillips and G2D Investments

0.03

Correlation Coefficient

Phillips  G2D Investments

Significant diversification

The 3 months correlation between Phillips and G2D is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Phillips 66 and G2D Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G2D Investments 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 G2D Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G2D Investments has no effect on the direction of Phillips i.e., Phillips and G2D Investments go up and down completely randomly.

Pair Corralation between Phillips and G2D Investments

Assuming the 90 days trading horizon Phillips 66 is expected to under-perform the G2D Investments. But the stock apears to be less risky and, when comparing its historical volatility, Phillips 66 is 1.59 times less risky than G2D Investments. The stock trades about -0.53 of its potential returns per unit of risk. The G2D Investments is currently generating about -0.25 of returns per unit of risk over similar time horizon. If you would invest  203.00  in G2D Investments on October 4, 2024 and sell it today you would lose (23.00) from holding G2D Investments or give up 11.33% 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.  G2D Investments

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.

G2D Investments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days G2D Investments has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's fundamental indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Phillips and G2D Investments

The main advantage of trading using opposite Phillips and G2D Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Phillips position performs unexpectedly, G2D Investments 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 G2D Investments will offset losses from the drop in G2D Investments' long position.

The idea behind Phillips 66 and G2D Investments 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.