Correlation Between Refinaria and Phillips

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

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

Diversification Opportunities for Refinaria and Phillips

-0.26

Correlation Coefficient

Refinaria  Phillips

Very good diversification

The 3 months correlation between Refinaria and Phillips is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Refinaria de Petrleos and Phillips 66 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phillips 66 and Refinaria 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 Refinaria de Petrleos 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 Refinaria i.e., Refinaria and Phillips go up and down completely randomly.

Pair Corralation between Refinaria and Phillips

Assuming the 90 days trading horizon Refinaria de Petrleos is expected to under-perform the Phillips. In addition to that, Refinaria is 1.87 times more volatile than Phillips 66. It trades about -0.06 of its total potential returns per unit of risk. Phillips 66 is currently generating about -0.03 per unit of volatility. If you would invest  35,400  in Phillips 66 on September 29, 2024 and sell it today you would lose (1,332) from holding Phillips 66 or give up 3.76% of portfolio value over 90 days.

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

Refinaria de Petrleos  vs.  Phillips 66

Refinaria de Petrleos

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Refinaria de Petrleos has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Phillips 66

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Refinaria and Phillips

The main advantage of trading using opposite Refinaria and Phillips positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Refinaria 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 Refinaria de Petrleos 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.