Correlation Between PHX Energy and Dow Jones
Can any of the company-specific risk be diversified away by investing in both PHX Energy and Dow Jones 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 Energy and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PHX Energy Services and Dow Jones Industrial, you can compare the effects of market volatilities on PHX Energy and Dow Jones 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 Energy with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of PHX Energy and Dow Jones.
Diversification Opportunities for PHX Energy and Dow Jones
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between PHX and Dow is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding PHX Energy Services and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and PHX 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 PHX Energy Services are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of PHX Energy i.e., PHX Energy and Dow Jones go up and down completely randomly.
Pair Corralation between PHX Energy and Dow Jones
Assuming the 90 days horizon PHX Energy Services is expected to generate 1.33 times more return on investment than Dow Jones. However, PHX Energy is 1.33 times more volatile than Dow Jones Industrial. It trades about -0.02 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about -0.27 per unit of risk. If you would invest 669.00 in PHX Energy Services on October 13, 2024 and sell it today you would lose (4.00) from holding PHX Energy Services or give up 0.6% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 95.0% |
Values | Daily Returns |
PHX Energy Services vs. Dow Jones Industrial
Performance |
Timeline |
PHX Energy and Dow Jones Volatility Contrast
Predicted Return Density |
Returns |
PHX Energy Services
Pair trading matchups for PHX Energy
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with PHX Energy and Dow Jones
The main advantage of trading using opposite PHX Energy and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PHX Energy position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.PHX Energy vs. Archer Limited | PHX Energy vs. Cathedral Energy Services | PHX Energy vs. Noble plc | PHX Energy vs. Borr Drilling |
Dow Jones vs. Lululemon Athletica | Dow Jones vs. Vistra Energy Corp | Dow Jones vs. The Gap, | Dow Jones vs. Pool Corporation |
Check out your portfolio center.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.
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