Correlation Between PBF Energy and Star Gas

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

By analyzing existing cross correlation between PBF Energy and Star Gas Partners, you can compare the effects of market volatilities on PBF Energy 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 PBF Energy with a short position of Star Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of PBF Energy and Star Gas.

Diversification Opportunities for PBF Energy and Star Gas

-0.7

Correlation Coefficient

PBF Energy  Star Gas

Excellent diversification

The 3 months correlation between PBF and Star is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding PBF Energy 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 PBF Energy 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 PBF Energy 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 PBF Energy i.e., PBF Energy and Star Gas go up and down completely randomly.

Pair Corralation between PBF Energy and Star Gas

Considering the 90-day investment horizon PBF Energy is expected to under-perform the Star Gas. In addition to that, PBF Energy is 2.44 times more volatile than Star Gas Partners. It trades about -0.1 of its total potential returns per unit of risk. Star Gas Partners is currently generating about 0.18 per unit of volatility. If you would invest  1,135  in Star Gas Partners on December 26, 2024 and sell it today you would earn a total of  189.00  from holding Star Gas Partners or generate 16.65% return on investment over 90 days.

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

PBF Energy  vs.  Star Gas Partners

PBF Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days PBF Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's fundamental drivers remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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 PBF Energy and Star Gas

The main advantage of trading using opposite PBF Energy and Star Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PBF Energy 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 PBF Energy 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.