Correlation Between Terreno Resources and PHN Multi

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

By analyzing existing cross correlation between Terreno Resources Corp and PHN Multi Style All Cap, you can compare the effects of market volatilities on Terreno Resources and PHN Multi 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 Terreno Resources with a short position of PHN Multi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Terreno Resources and PHN Multi.

Diversification Opportunities for Terreno Resources and PHN Multi

-0.54

Correlation Coefficient

Terreno Resources  PHN Multi

Excellent diversification

The 3 months correlation between Terreno and PHN is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Terreno Resources Corp and PHN Multi Style All Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PHN Multi Style and Terreno 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 Terreno Resources Corp are associated (or correlated) with PHN Multi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PHN Multi Style has no effect on the direction of Terreno Resources i.e., Terreno Resources and PHN Multi go up and down completely randomly.

Pair Corralation between Terreno Resources and PHN Multi

Assuming the 90 days trading horizon Terreno Resources Corp is expected to generate 42.69 times more return on investment than PHN Multi. However, Terreno Resources is 42.69 times more volatile than PHN Multi Style All Cap. It trades about 0.08 of its potential returns per unit of risk. PHN Multi Style All Cap is currently generating about 0.3 per unit of risk. If you would invest  2.00  in Terreno Resources Corp on September 11, 2024 and sell it today you would lose (1.00) from holding Terreno Resources Corp or give up 50.0% of portfolio value over 90 days.

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

Terreno Resources Corp  vs.  PHN Multi Style All Cap

Terreno Resources Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Terreno Resources Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Terreno Resources showed solid returns over the last few months and may actually be approaching a breakup point.

PHN Multi Style

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in PHN Multi Style All Cap are ranked lower than 23 (%) of all funds and portfolios of funds over the last 90 days. In spite of very unfluctuating basic indicators, PHN Multi displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Terreno Resources and PHN Multi

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

The idea behind Terreno Resources Corp and PHN Multi Style All Cap 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.