Correlation Between Phunware and Coterra Energy

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

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

Diversification Opportunities for Phunware and Coterra Energy

-0.62

Correlation Coefficient

Phunware  Coterra Energy

Excellent diversification

The 3 months correlation between Phunware and Coterra is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Phunware and Coterra Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coterra Energy and Phunware 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 Phunware are associated (or correlated) with Coterra Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coterra Energy has no effect on the direction of Phunware i.e., Phunware and Coterra Energy go up and down completely randomly.

Pair Corralation between Phunware and Coterra Energy

Given the investment horizon of 90 days Phunware is expected to generate 2.64 times more return on investment than Coterra Energy. However, Phunware is 2.64 times more volatile than Coterra Energy. It trades about 0.14 of its potential returns per unit of risk. Coterra Energy is currently generating about -0.05 per unit of risk. If you would invest  616.00  in Phunware on February 23, 2024 and sell it today you would earn a total of  68.00  from holding Phunware or generate 11.04% return on investment over 90 days.

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

Phunware  vs.  Coterra Energy

Phunware

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Phunware has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Phunware is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Coterra Energy

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Coterra Energy are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Coterra Energy may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Phunware and Coterra Energy

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

The idea behind Phunware and Coterra Energy 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.