Correlation Between Suburban Propane and Alvotech

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

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

Diversification Opportunities for Suburban Propane and Alvotech

-0.49

Correlation Coefficient

Suburban Propane  Alvotech

Very good diversification

The 3 months correlation between Suburban and Alvotech is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Suburban Propane Partners and Alvotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alvotech and Suburban Propane 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 Suburban Propane Partners are associated (or correlated) with Alvotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alvotech has no effect on the direction of Suburban Propane i.e., Suburban Propane and Alvotech go up and down completely randomly.

Pair Corralation between Suburban Propane and Alvotech

Considering the 90-day investment horizon Suburban Propane is expected to generate 1.99 times less return on investment than Alvotech. But when comparing it to its historical volatility, Suburban Propane Partners is 1.28 times less risky than Alvotech. It trades about 0.01 of its potential returns per unit of risk. Alvotech is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,242  in Alvotech on October 9, 2024 and sell it today you would earn a total of  68.00  from holding Alvotech or generate 5.48% return on investment over 90 days.

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

Suburban Propane Partners  vs.  Alvotech

Suburban Propane Partners

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Suburban Propane Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Suburban Propane is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Alvotech

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alvotech are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Alvotech is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Suburban Propane and Alvotech

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

The idea behind Suburban Propane Partners and Alvotech 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.