Correlation Between Ribbon Communications and Phillips

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

By analyzing existing cross correlation between Ribbon Communications and Phillips 66, you can compare the effects of market volatilities on Ribbon Communications and Phillips 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 Ribbon Communications with a short position of Phillips. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ribbon Communications and Phillips.

Diversification Opportunities for Ribbon Communications and Phillips

0.58

Correlation Coefficient

Ribbon Communications  Phillips

Very weak diversification

The 3 months correlation between Ribbon and Phillips is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Ribbon Communications and Phillips 66 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phillips 66 and Ribbon Communications 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 Ribbon Communications are associated (or correlated) with Phillips. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phillips 66 has no effect on the direction of Ribbon Communications i.e., Ribbon Communications and Phillips go up and down completely randomly.

Pair Corralation between Ribbon Communications and Phillips

Assuming the 90 days trading horizon Ribbon Communications is expected to generate 1.34 times less return on investment than Phillips. In addition to that, Ribbon Communications is 1.61 times more volatile than Phillips 66. It trades about 0.06 of its total potential returns per unit of risk. Phillips 66 is currently generating about 0.13 per unit of volatility. If you would invest  9,078  in Phillips 66 on April 24, 2025 and sell it today you would earn a total of  1,648  from holding Phillips 66 or generate 18.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Ribbon Communications  vs.  Phillips 66

Ribbon Communications

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ribbon Communications are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Ribbon Communications reported solid returns over the last few months and may actually be approaching a breakup point.

Phillips 66

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Phillips 66 are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Phillips reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ribbon Communications and Phillips

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

The idea behind Ribbon Communications and Phillips 66 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.