Correlation Between Ultrapar Participacoes and Phillips

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

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

Diversification Opportunities for Ultrapar Participacoes and Phillips

-0.01

Correlation Coefficient

Ultrapar Participacoes  Phillips

Good diversification

The 3 months correlation between Ultrapar and Phillips is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Ultrapar Participacoes SA and Phillips 66 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phillips 66 and Ultrapar Participacoes 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 Ultrapar Participacoes SA 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 Ultrapar Participacoes i.e., Ultrapar Participacoes and Phillips go up and down completely randomly.

Pair Corralation between Ultrapar Participacoes and Phillips

Considering the 90-day investment horizon Ultrapar Participacoes SA is expected to under-perform the Phillips. In addition to that, Ultrapar Participacoes is 1.57 times more volatile than Phillips 66. It trades about -0.17 of its total potential returns per unit of risk. Phillips 66 is currently generating about 0.0 per unit of volatility. If you would invest  13,381  in Phillips 66 on August 31, 2024 and sell it today you would lose (46.00) from holding Phillips 66 or give up 0.34% of portfolio value over 90 days.

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

Ultrapar Participacoes SA  vs.  Phillips 66

Ultrapar Participacoes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ultrapar Participacoes SA 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 December 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail 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. In spite of fairly strong basic indicators, Phillips is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ultrapar Participacoes and Phillips

The main advantage of trading using opposite Ultrapar Participacoes and Phillips positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ultrapar Participacoes 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 Ultrapar Participacoes SA 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.

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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.