Correlation Between Suburban Propane and PGE Corp

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

Diversification Opportunities for Suburban Propane and PGE Corp

0.62

Correlation Coefficient

Suburban Propane  PGE Corp

Poor diversification

The 3 months correlation between Suburban and PGE is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Suburban Propane Partners and PGE Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PGE Corp 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 PGE Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PGE Corp has no effect on the direction of Suburban Propane i.e., Suburban Propane and PGE Corp go up and down completely randomly.

Pair Corralation between Suburban Propane and PGE Corp

Considering the 90-day investment horizon Suburban Propane Partners is expected to generate 1.44 times more return on investment than PGE Corp. However, Suburban Propane is 1.44 times more volatile than PGE Corp. It trades about 0.13 of its potential returns per unit of risk. PGE Corp is currently generating about 0.01 per unit of risk. If you would invest  1,718  in Suburban Propane Partners on September 4, 2024 and sell it today you would earn a total of  243.00  from holding Suburban Propane Partners or generate 14.14% return on investment over 90 days.

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

Suburban Propane Partners  vs.  PGE Corp

Suburban Propane Partners

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Suburban Propane Partners are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, Suburban Propane demonstrated solid returns over the last few months and may actually be approaching a breakup point.

PGE Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PGE Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, PGE Corp is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Suburban Propane and PGE Corp

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

The idea behind Suburban Propane Partners and PGE Corp 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.