Correlation Between SilverBow Resources and PHX Minerals

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

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

Diversification Opportunities for SilverBow Resources and PHX Minerals

-0.19

Correlation Coefficient

SilverBow Resources  PHX Minerals

Good diversification

The 3 months correlation between SilverBow and PHX is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding SilverBow Resources and PHX Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PHX Minerals and SilverBow Resources 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 SilverBow Resources 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 SilverBow Resources i.e., SilverBow Resources and PHX Minerals go up and down completely randomly.

Pair Corralation between SilverBow Resources and PHX Minerals

If you would invest  336.00  in PHX Minerals on September 17, 2024 and sell it today you would earn a total of  65.00  from holding PHX Minerals or generate 19.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

SilverBow Resources  vs.  PHX Minerals

SilverBow Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SilverBow Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, SilverBow Resources is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

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 unsteady technical indicators, PHX Minerals showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SilverBow Resources and PHX Minerals

The main advantage of trading using opposite SilverBow Resources and PHX Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SilverBow Resources 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 SilverBow Resources 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.