Correlation Between PHX Energy and Power Financial

Can any of the company-specific risk be diversified away by investing in both PHX Energy and Power Financial 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 Power Financial 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 Power Financial Corp, you can compare the effects of market volatilities on PHX Energy and Power Financial 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 Power Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of PHX Energy and Power Financial.

Diversification Opportunities for PHX Energy and Power Financial

0.78

Correlation Coefficient

PHX Energy  Power Financial

Poor diversification

The 3 months correlation between PHX and Power is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding PHX Energy Services and Power Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Financial Corp 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 Power Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Financial Corp has no effect on the direction of PHX Energy i.e., PHX Energy and Power Financial go up and down completely randomly.

Pair Corralation between PHX Energy and Power Financial

Assuming the 90 days trading horizon PHX Energy Services is expected to generate 2.57 times more return on investment than Power Financial. However, PHX Energy is 2.57 times more volatile than Power Financial Corp. It trades about 0.11 of its potential returns per unit of risk. Power Financial Corp is currently generating about 0.16 per unit of risk. If you would invest  751.00  in PHX Energy Services on April 22, 2025 and sell it today you would earn a total of  79.00  from holding PHX Energy Services or generate 10.52% return on investment over 90 days.

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

PHX Energy Services  vs.  Power Financial Corp

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 8 (%) 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.

Power Financial Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Power Financial Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, Power Financial is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with PHX Energy and Power Financial

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

The idea behind PHX Energy Services and Power Financial Corp 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.