Correlation Between HF Sinclair and Service Properties

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

Diversification Opportunities for HF Sinclair and Service Properties

0.77

Correlation Coefficient

HF Sinclair  Service Properties

Poor diversification

The 3 months correlation between DINO and Service is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding HF Sinclair Corp and Service Properties Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Service Properties Trust 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 Service Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Service Properties Trust has no effect on the direction of HF Sinclair i.e., HF Sinclair and Service Properties go up and down completely randomly.

Pair Corralation between HF Sinclair and Service Properties

Given the investment horizon of 90 days HF Sinclair Corp is expected to under-perform the Service Properties. But the stock apears to be less risky and, when comparing its historical volatility, HF Sinclair Corp is 1.93 times less risky than Service Properties. The stock trades about -0.32 of its potential returns per unit of risk. The Service Properties Trust is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest  274.00  in Service Properties Trust on October 6, 2024 and sell it today you would lose (23.00) from holding Service Properties Trust or give up 8.39% of portfolio value over 90 days.

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

HF Sinclair Corp  vs.  Service Properties Trust

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.

Service Properties Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Service Properties Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with HF Sinclair and Service Properties

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

The idea behind HF Sinclair Corp and Service Properties Trust 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.