Correlation Between HF Sinclair and World Kinect

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

Diversification Opportunities for HF Sinclair and World Kinect

0.21

Correlation Coefficient

HF Sinclair  World Kinect

Modest diversification

The 3 months correlation between DINO and World is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding HF Sinclair Corp and World Kinect in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on World Kinect 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 World Kinect. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of World Kinect has no effect on the direction of HF Sinclair i.e., HF Sinclair and World Kinect go up and down completely randomly.

Pair Corralation between HF Sinclair and World Kinect

Given the investment horizon of 90 days HF Sinclair is expected to generate 2.24 times less return on investment than World Kinect. In addition to that, HF Sinclair is 1.25 times more volatile than World Kinect. It trades about 0.03 of its total potential returns per unit of risk. World Kinect is currently generating about 0.07 per unit of volatility. If you would invest  2,670  in World Kinect on December 20, 2024 and sell it today you would earn a total of  212.00  from holding World Kinect or generate 7.94% 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.  World Kinect

HF Sinclair Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in HF Sinclair Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

World Kinect

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in World Kinect are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak forward-looking signals, World Kinect may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with HF Sinclair and World Kinect

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

The idea behind HF Sinclair Corp and World Kinect 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.