Correlation Between PHX Minerals and Vital Energy

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

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

Diversification Opportunities for PHX Minerals and Vital Energy

0.49

Correlation Coefficient

PHX Minerals  Vital Energy

Very weak diversification

The 3 months correlation between PHX and Vital is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding PHX Minerals and Vital Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vital Energy and PHX Minerals 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 PHX Minerals are associated (or correlated) with Vital Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vital Energy has no effect on the direction of PHX Minerals i.e., PHX Minerals and Vital Energy go up and down completely randomly.

Pair Corralation between PHX Minerals and Vital Energy

Considering the 90-day investment horizon PHX Minerals is expected to generate 0.55 times more return on investment than Vital Energy. However, PHX Minerals is 1.83 times less risky than Vital Energy. It trades about 0.03 of its potential returns per unit of risk. Vital Energy is currently generating about -0.13 per unit of risk. If you would invest  388.00  in PHX Minerals on December 17, 2024 and sell it today you would earn a total of  9.00  from holding PHX Minerals or generate 2.32% return on investment over 90 days.

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

PHX Minerals  vs.  Vital Energy

PHX Minerals

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PHX Minerals are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical indicators, PHX Minerals is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Vital Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vital Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's essential indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with PHX Minerals and Vital Energy

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

The idea behind PHX Minerals and Vital Energy 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.