Correlation Between Phillips and Marfrig Global

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

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

Diversification Opportunities for Phillips and Marfrig Global

-0.08

Correlation Coefficient

Phillips  Marfrig Global

Good diversification

The 3 months correlation between Phillips and Marfrig is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Phillips 66 and Marfrig Global Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marfrig Global Foods 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 Marfrig Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marfrig Global Foods has no effect on the direction of Phillips i.e., Phillips and Marfrig Global go up and down completely randomly.

Pair Corralation between Phillips and Marfrig Global

Assuming the 90 days trading horizon Phillips 66 is expected to generate 0.36 times more return on investment than Marfrig Global. However, Phillips 66 is 2.79 times less risky than Marfrig Global. It trades about 0.26 of its potential returns per unit of risk. Marfrig Global Foods is currently generating about -0.14 per unit of risk. If you would invest  34,068  in Phillips 66 on October 26, 2024 and sell it today you would earn a total of  1,470  from holding Phillips 66 or generate 4.31% return on investment over 90 days.

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

Phillips 66  vs.  Marfrig Global Foods

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 somewhat strong basic indicators, Phillips is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Marfrig Global Foods

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Marfrig Global Foods are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Marfrig Global unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Phillips and Marfrig Global

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

The idea behind Phillips 66 and Marfrig Global Foods 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.