Correlation Between Calumet Specialty and PHX Minerals

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

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

Diversification Opportunities for Calumet Specialty and PHX Minerals

0.73

Correlation Coefficient

Calumet Specialty  PHX Minerals

Poor diversification

The 3 months correlation between Calumet and PHX is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Calumet Specialty Products and PHX Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PHX Minerals and Calumet Specialty 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 Calumet Specialty Products are associated (or correlated) with PHX Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PHX Minerals has no effect on the direction of Calumet Specialty i.e., Calumet Specialty and PHX Minerals go up and down completely randomly.

Pair Corralation between Calumet Specialty and PHX Minerals

Given the investment horizon of 90 days Calumet Specialty is expected to generate 1.34 times less return on investment than PHX Minerals. In addition to that, Calumet Specialty is 1.61 times more volatile than PHX Minerals. It trades about 0.06 of its total potential returns per unit of risk. PHX Minerals is currently generating about 0.14 per unit of volatility. If you would invest  336.00  in PHX Minerals on September 17, 2024 and sell it today you would earn a total of  60.00  from holding PHX Minerals or generate 17.86% return on investment over 90 days.

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

Calumet Specialty Products  vs.  PHX Minerals

Calumet Specialty

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Calumet Specialty Products are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal primary indicators, Calumet Specialty unveiled solid returns over the last few months and may actually be approaching a breakup point.

PHX Minerals

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PHX Minerals are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady technical indicators, PHX Minerals showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Calumet Specialty and PHX Minerals

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

The idea behind Calumet Specialty Products and PHX Minerals 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.