Correlation Between Star Gas and Icahn Enterprises

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

Diversification Opportunities for Star Gas and Icahn Enterprises

0.75

Correlation Coefficient

Star Gas  Icahn Enterprises

Poor diversification

The 3 months correlation between Star and Icahn is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Star Gas Partners and Icahn Enterprises LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icahn Enterprises 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 Icahn Enterprises. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icahn Enterprises has no effect on the direction of Star Gas i.e., Star Gas and Icahn Enterprises go up and down completely randomly.

Pair Corralation between Star Gas and Icahn Enterprises

Considering the 90-day investment horizon Star Gas Partners is expected to generate 0.84 times more return on investment than Icahn Enterprises. However, Star Gas Partners is 1.18 times less risky than Icahn Enterprises. It trades about 0.15 of its potential returns per unit of risk. Icahn Enterprises LP is currently generating about 0.1 per unit of risk. If you would invest  1,144  in Star Gas Partners on December 27, 2024 and sell it today you would earn a total of  159.00  from holding Star Gas Partners or generate 13.9% return on investment over 90 days.

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

Star Gas Partners  vs.  Icahn Enterprises 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 11 (%) 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.

Icahn Enterprises

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Icahn Enterprises LP are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting technical and fundamental indicators, Icahn Enterprises may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Star Gas and Icahn Enterprises

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

The idea behind Star Gas Partners and Icahn Enterprises 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.

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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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.