Correlation Between Star Gas and Crossamerica Partners

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

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

Diversification Opportunities for Star Gas and Crossamerica Partners

0.91

Correlation Coefficient

Star Gas  Crossamerica Partners

Almost no diversification

The 3 months correlation between Star and Crossamerica is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Star Gas Partners and Crossamerica Partners LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crossamerica Partners and Star Gas 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 Star Gas Partners are associated (or correlated) with Crossamerica Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crossamerica Partners has no effect on the direction of Star Gas i.e., Star Gas and Crossamerica Partners go up and down completely randomly.

Pair Corralation between Star Gas and Crossamerica Partners

Considering the 90-day investment horizon Star Gas Partners is expected to generate 1.56 times more return on investment than Crossamerica Partners. However, Star Gas is 1.56 times more volatile than Crossamerica Partners LP. It trades about 0.17 of its potential returns per unit of risk. Crossamerica Partners LP is currently generating about 0.23 per unit of risk. If you would invest  1,143  in Star Gas Partners on December 30, 2024 and sell it today you would earn a total of  194.00  from holding Star Gas Partners or generate 16.97% return on investment over 90 days.

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

Star Gas Partners  vs.  Crossamerica Partners LP

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.

Crossamerica Partners

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Crossamerica Partners LP are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Crossamerica Partners disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Star Gas and Crossamerica Partners

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

The idea behind Star Gas Partners and Crossamerica Partners LP 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.