Correlation Between Phoenix Mills and Spencers Retail

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

By analyzing existing cross correlation between The Phoenix Mills and Spencers Retail Limited, you can compare the effects of market volatilities on Phoenix Mills and Spencers Retail 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 Phoenix Mills with a short position of Spencers Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Phoenix Mills and Spencers Retail.

Diversification Opportunities for Phoenix Mills and Spencers Retail

0.09

Correlation Coefficient

Phoenix Mills  Spencers Retail

Significant diversification

The 3 months correlation between Phoenix and Spencers is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding The Phoenix Mills and Spencers Retail Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spencers Retail and Phoenix Mills 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 The Phoenix Mills are associated (or correlated) with Spencers Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spencers Retail has no effect on the direction of Phoenix Mills i.e., Phoenix Mills and Spencers Retail go up and down completely randomly.

Pair Corralation between Phoenix Mills and Spencers Retail

Assuming the 90 days trading horizon The Phoenix Mills is expected to generate 0.99 times more return on investment than Spencers Retail. However, The Phoenix Mills is 1.01 times less risky than Spencers Retail. It trades about -0.06 of its potential returns per unit of risk. Spencers Retail Limited is currently generating about -0.11 per unit of risk. If you would invest  172,875  in The Phoenix Mills on October 9, 2024 and sell it today you would lose (18,115) from holding The Phoenix Mills or give up 10.48% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

The Phoenix Mills  vs.  Spencers Retail Limited

Phoenix Mills

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Phoenix Mills has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Spencers Retail

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Spencers Retail Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Phoenix Mills and Spencers Retail

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

The idea behind The Phoenix Mills and Spencers Retail Limited 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.