Correlation Between PBF Energy and Ampol

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

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

Diversification Opportunities for PBF Energy and Ampol

0.46

Correlation Coefficient

PBF Energy  Ampol

Very weak diversification

The 3 months correlation between PBF and Ampol is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding PBF Energy and Ampol Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ampol Ltd ADR and PBF Energy 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 PBF Energy are associated (or correlated) with Ampol. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ampol Ltd ADR has no effect on the direction of PBF Energy i.e., PBF Energy and Ampol go up and down completely randomly.

Pair Corralation between PBF Energy and Ampol

Considering the 90-day investment horizon PBF Energy is expected to under-perform the Ampol. But the stock apears to be less risky and, when comparing its historical volatility, PBF Energy is 1.32 times less risky than Ampol. The stock trades about -0.13 of its potential returns per unit of risk. The Ampol Ltd ADR is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  3,583  in Ampol Ltd ADR on September 16, 2024 and sell it today you would lose (133.00) from holding Ampol Ltd ADR or give up 3.71% of portfolio value over 90 days.

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

PBF Energy  vs.  Ampol Ltd ADR

PBF Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PBF Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's fundamental drivers remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Ampol Ltd ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ampol Ltd ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak 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 PBF Energy and Ampol

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

The idea behind PBF Energy and Ampol Ltd ADR 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.