Correlation Between Star Gas and Par Pacific

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

Diversification Opportunities for Star Gas and Par Pacific

-0.75

Correlation Coefficient

Star Gas  Par Pacific

Pay attention - limited upside

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

Pair Corralation between Star Gas and Par Pacific

Considering the 90-day investment horizon Star Gas Partners is expected to generate 0.45 times more return on investment than Par Pacific. However, Star Gas Partners is 2.2 times less risky than Par Pacific. It trades about 0.16 of its potential returns per unit of risk. Par Pacific Holdings is currently generating about -0.05 per unit of risk. If you would invest  1,135  in Star Gas Partners on December 26, 2024 and sell it today you would earn a total of  168.00  from holding Star Gas Partners or generate 14.8% return on investment over 90 days.

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

Star Gas Partners  vs.  Par Pacific Holdings

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 12 (%) 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.

Par Pacific Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Par Pacific Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest conflicting performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Star Gas and Par Pacific

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

The idea behind Star Gas Partners and Par Pacific Holdings 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.