Correlation Between PBF Energy and Phillips

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

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

Diversification Opportunities for PBF Energy and Phillips

0.39

Correlation Coefficient

PBF Energy  Phillips

Weak diversification

The 3 months correlation between PBF and Phillips is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding PBF Energy and Phillips 66 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phillips 66 and PBF Energy 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 PBF Energy 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 PBF Energy i.e., PBF Energy and Phillips go up and down completely randomly.

Pair Corralation between PBF Energy and Phillips

Considering the 90-day investment horizon PBF Energy is expected to under-perform the Phillips. In addition to that, PBF Energy is 1.61 times more volatile than Phillips 66. It trades about -0.03 of its total potential returns per unit of risk. Phillips 66 is currently generating about 0.04 per unit of volatility. If you would invest  9,424  in Phillips 66 on November 28, 2024 and sell it today you would earn a total of  3,120  from holding Phillips 66 or generate 33.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

PBF Energy  vs.  Phillips 66

PBF Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days PBF Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental drivers remain nearly stable which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Phillips 66

Risk-Adjusted Performance

Very Weak

Over the last 90 days Phillips 66 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Phillips is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with PBF Energy and Phillips

The main advantage of trading using opposite PBF Energy and Phillips positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PBF Energy 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 PBF Energy 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.