Correlation Between HF Sinclair and CaliberCos

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

By analyzing existing cross correlation between HF Sinclair Corp and CaliberCos Class A, you can compare the effects of market volatilities on HF Sinclair and CaliberCos 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 HF Sinclair with a short position of CaliberCos. Check out your portfolio center. Please also check ongoing floating volatility patterns of HF Sinclair and CaliberCos.

Diversification Opportunities for HF Sinclair and CaliberCos

0.23

Correlation Coefficient

HF Sinclair  CaliberCos

Modest diversification

The 3 months correlation between DINO and CaliberCos is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding HF Sinclair Corp and CaliberCos Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CaliberCos Class A and HF Sinclair 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 HF Sinclair Corp are associated (or correlated) with CaliberCos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CaliberCos Class A has no effect on the direction of HF Sinclair i.e., HF Sinclair and CaliberCos go up and down completely randomly.

Pair Corralation between HF Sinclair and CaliberCos

Given the investment horizon of 90 days HF Sinclair Corp is expected to under-perform the CaliberCos. But the stock apears to be less risky and, when comparing its historical volatility, HF Sinclair Corp is 2.75 times less risky than CaliberCos. The stock trades about -0.36 of its potential returns per unit of risk. The CaliberCos Class A is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest  52.00  in CaliberCos Class A on October 9, 2024 and sell it today you would earn a total of  22.00  from holding CaliberCos Class A or generate 42.31% return on investment over 90 days.

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

HF Sinclair Corp  vs.  CaliberCos Class A

HF Sinclair Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HF Sinclair Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

CaliberCos Class A

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CaliberCos Class A are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, CaliberCos exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HF Sinclair and CaliberCos

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

The idea behind HF Sinclair Corp and CaliberCos Class A 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.