Correlation Between HF Sinclair and Terra Firma

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

Diversification Opportunities for HF Sinclair and Terra Firma

0.0

Correlation Coefficient

HF Sinclair  Terra Firma

Pay attention - limited upside

The 3 months correlation between DINO and Terra is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding HF Sinclair Corp and Terra Firma Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Terra Firma Capital 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 Terra Firma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Terra Firma Capital has no effect on the direction of HF Sinclair i.e., HF Sinclair and Terra Firma go up and down completely randomly.

Pair Corralation between HF Sinclair and Terra Firma

If you would invest (100.00) in Terra Firma Capital on December 18, 2024 and sell it today you would earn a total of  100.00  from holding Terra Firma Capital or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

HF Sinclair Corp  vs.  Terra Firma Capital

HF Sinclair Corp

Risk-Adjusted Performance

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 very healthy basic indicators, HF Sinclair is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Terra Firma Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Terra Firma Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Terra Firma is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with HF Sinclair and Terra Firma

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

The idea behind HF Sinclair Corp and Terra Firma Capital 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.