Correlation Between Crossamerica Partners and Star Gas

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

Diversification Opportunities for Crossamerica Partners and Star Gas

0.91

Correlation Coefficient

Crossamerica Partners  Star Gas

Almost no diversification

The 3 months correlation between Crossamerica and Star is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Crossamerica Partners LP and Star Gas Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Star Gas Partners 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 Star Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Star Gas Partners has no effect on the direction of Crossamerica Partners i.e., Crossamerica Partners and Star Gas go up and down completely randomly.

Pair Corralation between Crossamerica Partners and Star Gas

Given the investment horizon of 90 days Crossamerica Partners is expected to generate 1.15 times less return on investment than Star Gas. But when comparing it to its historical volatility, Crossamerica Partners LP is 1.56 times less risky than Star Gas. It trades about 0.23 of its potential returns per unit of risk. Star Gas Partners is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  1,143  in Star Gas Partners on December 30, 2024 and sell it today you would earn a total of  194.00  from holding Star Gas Partners or generate 16.97% return on investment over 90 days.

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

Crossamerica Partners LP  vs.  Star Gas Partners

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.

Star Gas Partners

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Star Gas Partners are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Star Gas unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Crossamerica Partners and Star Gas

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

The idea behind Crossamerica Partners LP and Star Gas Partners 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.