Correlation Between Enerflex and Phillips

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

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

Diversification Opportunities for Enerflex and Phillips

-0.35

Correlation Coefficient

Enerflex  Phillips

Very good diversification

The 3 months correlation between Enerflex and Phillips is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Enerflex and Phillips 66 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phillips 66 and Enerflex 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 Enerflex 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 Enerflex i.e., Enerflex and Phillips go up and down completely randomly.

Pair Corralation between Enerflex and Phillips

Given the investment horizon of 90 days Enerflex is expected to under-perform the Phillips. In addition to that, Enerflex is 1.09 times more volatile than Phillips 66. It trades about -0.25 of its total potential returns per unit of risk. Phillips 66 is currently generating about -0.15 per unit of volatility. If you would invest  12,222  in Phillips 66 on January 6, 2025 and sell it today you would lose (2,341) from holding Phillips 66 or give up 19.15% of portfolio value over 90 days.

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

Enerflex  vs.  Phillips 66

Enerflex

Risk-Adjusted Performance

Very Weak

Over the last 90 days Enerflex has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in May 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private 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 latest unsteady performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Enerflex and Phillips

The main advantage of trading using opposite Enerflex and Phillips positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enerflex 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 Enerflex 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.