Correlation Between Pyxis Tankers and BP Prudhoe

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

By analyzing existing cross correlation between Pyxis Tankers and BP Prudhoe Bay, you can compare the effects of market volatilities on Pyxis Tankers and BP Prudhoe 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 Pyxis Tankers with a short position of BP Prudhoe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pyxis Tankers and BP Prudhoe.

Diversification Opportunities for Pyxis Tankers and BP Prudhoe

0.82

Correlation Coefficient

Pyxis Tankers  BP Prudhoe

Very poor diversification

The 3 months correlation between Pyxis and BPT is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Pyxis Tankers and BP Prudhoe Bay in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BP Prudhoe Bay and Pyxis Tankers 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 Pyxis Tankers are associated (or correlated) with BP Prudhoe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BP Prudhoe Bay has no effect on the direction of Pyxis Tankers i.e., Pyxis Tankers and BP Prudhoe go up and down completely randomly.

Pair Corralation between Pyxis Tankers and BP Prudhoe

Assuming the 90 days horizon Pyxis Tankers is expected to under-perform the BP Prudhoe. In addition to that, Pyxis Tankers is 2.39 times more volatile than BP Prudhoe Bay. It trades about -0.08 of its total potential returns per unit of risk. BP Prudhoe Bay is currently generating about -0.14 per unit of volatility. If you would invest  110.00  in BP Prudhoe Bay on October 23, 2024 and sell it today you would lose (64.00) from holding BP Prudhoe Bay or give up 58.18% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	63.33%
Values	Daily Returns

Pyxis Tankers  vs.  BP Prudhoe Bay

Pyxis Tankers

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pyxis Tankers has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

BP Prudhoe Bay

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BP Prudhoe Bay 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 basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Pyxis Tankers and BP Prudhoe

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

The idea behind Pyxis Tankers and BP Prudhoe Bay 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..