Correlation Between Crossamerica Partners and Par Pacific

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

By analyzing existing cross correlation between Crossamerica Partners LP and Par Pacific Holdings, you can compare the effects of market volatilities on Crossamerica Partners and Par Pacific 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 Crossamerica Partners with a short position of Par Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crossamerica Partners and Par Pacific.

Diversification Opportunities for Crossamerica Partners and Par Pacific

-0.69

Correlation Coefficient

Crossamerica Partners  Par Pacific

Excellent diversification

The 3 months correlation between Crossamerica and Par is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Crossamerica Partners LP and Par Pacific Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Par Pacific Holdings and Crossamerica Partners 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 Crossamerica Partners LP are associated (or correlated) with Par Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Par Pacific Holdings has no effect on the direction of Crossamerica Partners i.e., Crossamerica Partners and Par Pacific go up and down completely randomly.

Pair Corralation between Crossamerica Partners and Par Pacific

Given the investment horizon of 90 days Crossamerica Partners LP is expected to generate 0.29 times more return on investment than Par Pacific. However, Crossamerica Partners LP is 3.46 times less risky than Par Pacific. It trades about 0.23 of its potential returns per unit of risk. Par Pacific Holdings is currently generating about -0.04 per unit of risk. If you would invest  2,116  in Crossamerica Partners LP on December 30, 2024 and sell it today you would earn a total of  317.00  from holding Crossamerica Partners LP or generate 14.98% return on investment over 90 days.

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

Crossamerica Partners LP  vs.  Par Pacific Holdings

Crossamerica Partners

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Crossamerica Partners LP are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Crossamerica Partners disclosed solid returns over the last few months and may actually be approaching a breakup point.

Par Pacific Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Par Pacific Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest conflicting performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Crossamerica Partners and Par Pacific

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

The idea behind Crossamerica Partners LP and Par Pacific Holdings 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.