Correlation Between HF Sinclair and Phillips

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

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

Diversification Opportunities for HF Sinclair and Phillips

0.65

Correlation Coefficient

HF Sinclair  Phillips

Poor diversification

The 3 months correlation between DINO and Phillips is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding HF Sinclair Corp and Phillips 66 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phillips 66 and HF Sinclair 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 HF Sinclair Corp 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 HF Sinclair i.e., HF Sinclair and Phillips go up and down completely randomly.

Pair Corralation between HF Sinclair and Phillips

Given the investment horizon of 90 days HF Sinclair Corp is expected to under-perform the Phillips. In addition to that, HF Sinclair is 1.08 times more volatile than Phillips 66. It trades about -0.11 of its total potential returns per unit of risk. Phillips 66 is currently generating about -0.07 per unit of volatility. If you would invest  11,494  in Phillips 66 on January 12, 2025 and sell it today you would lose (1,756) from holding Phillips 66 or give up 15.28% of portfolio value over 90 days.

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

HF Sinclair Corp  vs.  Phillips 66

HF Sinclair Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days HF Sinclair Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in May 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Phillips 66

Risk-Adjusted Performance

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 unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in May 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with HF Sinclair and Phillips

The main advantage of trading using opposite HF Sinclair and Phillips positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HF Sinclair 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 HF Sinclair Corp 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 Global Correlations module to find global opportunities by holding instruments from different markets.