Correlation Between PHX Energy and Brunswick Exploration

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

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

Diversification Opportunities for PHX Energy and Brunswick Exploration

-0.49

Correlation Coefficient

PHX Energy  Brunswick Exploration

Very good diversification

The 3 months correlation between PHX and Brunswick is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding PHX Energy Services and Brunswick Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brunswick Exploration and PHX 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 PHX Energy Services are associated (or correlated) with Brunswick Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brunswick Exploration has no effect on the direction of PHX Energy i.e., PHX Energy and Brunswick Exploration go up and down completely randomly.

Pair Corralation between PHX Energy and Brunswick Exploration

Assuming the 90 days trading horizon PHX Energy Services is expected to generate 0.28 times more return on investment than Brunswick Exploration. However, PHX Energy Services is 3.53 times less risky than Brunswick Exploration. It trades about 0.1 of its potential returns per unit of risk. Brunswick Exploration is currently generating about -0.03 per unit of risk. If you would invest  754.00  in PHX Energy Services on April 24, 2025 and sell it today you would earn a total of  68.00  from holding PHX Energy Services or generate 9.02% return on investment over 90 days.

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

PHX Energy Services  vs.  Brunswick Exploration

PHX Energy Services

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PHX Energy Services are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, PHX Energy may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Brunswick Exploration

Risk-Adjusted Performance

Very Weak

Over the last 90 days Brunswick Exploration has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with PHX Energy and Brunswick Exploration

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

The idea behind PHX Energy Services and Brunswick Exploration 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.