Correlation Between Unit and PHX Energy

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

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

Diversification Opportunities for Unit and PHX Energy

0.89

Correlation Coefficient

Unit  PHX Energy

Very poor diversification

The 3 months correlation between Unit and PHX is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Unit Corp. and PHX Energy Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PHX Energy Services and Unit 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 Unit Corporation are associated (or correlated) with PHX Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PHX Energy Services has no effect on the direction of Unit i.e., Unit and PHX Energy go up and down completely randomly.

Pair Corralation between Unit and PHX Energy

Given the investment horizon of 90 days Unit is expected to generate 1.07 times less return on investment than PHX Energy. In addition to that, Unit is 1.18 times more volatile than PHX Energy Services. It trades about 0.1 of its total potential returns per unit of risk. PHX Energy Services is currently generating about 0.12 per unit of volatility. If you would invest  543.00  in PHX Energy Services on April 29, 2025 and sell it today you would earn a total of  62.00  from holding PHX Energy Services or generate 11.42% return on investment over 90 days.

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

Unit Corp.  vs.  PHX Energy Services

Unit

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Unit Corporation are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Unit may actually be approaching a critical reversion point that can send shares even higher in August 2025.

PHX Energy Services

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PHX Energy Services are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical indicators, PHX Energy may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Unit and PHX Energy

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

The idea behind Unit Corporation and PHX Energy Services 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.