Correlation Between Suburban Propane and Dana
Can any of the company-specific risk be diversified away by investing in both Suburban Propane and Dana 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 Dana 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 Dana Inc, you can compare the effects of market volatilities on Suburban Propane and Dana 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 Dana. Check out your portfolio center. Please also check ongoing floating volatility patterns of Suburban Propane and Dana.
Diversification Opportunities for Suburban Propane and Dana
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Suburban and Dana is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Suburban Propane Partners and Dana Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dana Inc 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 Dana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dana Inc has no effect on the direction of Suburban Propane i.e., Suburban Propane and Dana go up and down completely randomly.
Pair Corralation between Suburban Propane and Dana
Considering the 90-day investment horizon Suburban Propane Partners is expected to under-perform the Dana. But the stock apears to be less risky and, when comparing its historical volatility, Suburban Propane Partners is 2.84 times less risky than Dana. The stock trades about -0.29 of its potential returns per unit of risk. The Dana Inc is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 888.00 in Dana Inc on September 24, 2024 and sell it today you would earn a total of 261.00 from holding Dana Inc or generate 29.39% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Suburban Propane Partners vs. Dana Inc
Performance |
Timeline |
Suburban Propane Partners |
Dana Inc |
Suburban Propane and Dana Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Suburban Propane and Dana
The main advantage of trading using opposite Suburban Propane and Dana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Suburban Propane position performs unexpectedly, Dana 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 Dana will offset losses from the drop in Dana's long position.Suburban Propane vs. NewJersey Resources | Suburban Propane vs. Northwest Natural Gas | Suburban Propane vs. Chesapeake Utilities | Suburban Propane vs. UGI Corporation |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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