Correlation Between PHX Minerals and Gulfport Energy

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

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

Diversification Opportunities for PHX Minerals and Gulfport Energy

0.62

Correlation Coefficient

PHX Minerals  Gulfport Energy

Poor diversification

The 3 months correlation between PHX and Gulfport is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding PHX Minerals and Gulfport Energy Operating in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gulfport Energy Operating and PHX Minerals 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 PHX Minerals are associated (or correlated) with Gulfport Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gulfport Energy Operating has no effect on the direction of PHX Minerals i.e., PHX Minerals and Gulfport Energy go up and down completely randomly.

Pair Corralation between PHX Minerals and Gulfport Energy

Considering the 90-day investment horizon PHX Minerals is expected to generate 1.61 times less return on investment than Gulfport Energy. But when comparing it to its historical volatility, PHX Minerals is 1.07 times less risky than Gulfport Energy. It trades about 0.26 of its potential returns per unit of risk. Gulfport Energy Operating is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest  13,876  in Gulfport Energy Operating on September 5, 2024 and sell it today you would earn a total of  3,623  from holding Gulfport Energy Operating or generate 26.11% return on investment over 90 days.

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

PHX Minerals  vs.  Gulfport Energy Operating

PHX Minerals

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PHX Minerals are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating technical indicators, PHX Minerals showed solid returns over the last few months and may actually be approaching a breakup point.

Gulfport Energy Operating

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gulfport Energy Operating are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Gulfport Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PHX Minerals and Gulfport Energy

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

The idea behind PHX Minerals and Gulfport Energy Operating 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.

Check out your portfolio center.

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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.