Correlation Between Suburban Propane and Pure Cycle

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

Diversification Opportunities for Suburban Propane and Pure Cycle

-0.55

Correlation Coefficient

Suburban Propane  Pure Cycle

Excellent diversification

The 3 months correlation between Suburban and Pure is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Suburban Propane Partners and Pure Cycle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pure Cycle 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 Pure Cycle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pure Cycle has no effect on the direction of Suburban Propane i.e., Suburban Propane and Pure Cycle go up and down completely randomly.

Pair Corralation between Suburban Propane and Pure Cycle

Considering the 90-day investment horizon Suburban Propane Partners is expected to generate 0.95 times more return on investment than Pure Cycle. However, Suburban Propane Partners is 1.05 times less risky than Pure Cycle. It trades about 0.19 of its potential returns per unit of risk. Pure Cycle is currently generating about -0.12 per unit of risk. If you would invest  1,738  in Suburban Propane Partners on December 19, 2024 and sell it today you would earn a total of  356.00  from holding Suburban Propane Partners or generate 20.48% 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.  Pure Cycle

Suburban Propane Partners

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Suburban Propane Partners are ranked lower than 14 (%) 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.

Pure Cycle

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pure Cycle has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Suburban Propane and Pure Cycle

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

The idea behind Suburban Propane Partners and Pure Cycle 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.