Correlation Between Suburban Propane and SLR Investment

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

Diversification Opportunities for Suburban Propane and SLR Investment

0.85

Correlation Coefficient

Suburban Propane  SLR Investment

Very poor diversification

The 3 months correlation between Suburban and SLR is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Suburban Propane Partners and SLR Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SLR Investment 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 SLR Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SLR Investment Corp has no effect on the direction of Suburban Propane i.e., Suburban Propane and SLR Investment go up and down completely randomly.

Pair Corralation between Suburban Propane and SLR Investment

Considering the 90-day investment horizon Suburban Propane Partners is expected to generate 1.98 times more return on investment than SLR Investment. However, Suburban Propane is 1.98 times more volatile than SLR Investment Corp. It trades about 0.19 of its potential returns per unit of risk. SLR Investment Corp is currently generating about 0.17 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 Together
Strength	Strong
Accuracy	98.33%
Values	Daily Returns

Suburban Propane Partners  vs.  SLR Investment Corp

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.

SLR Investment Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SLR Investment Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, SLR Investment may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Suburban Propane and SLR Investment

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

The idea behind Suburban Propane Partners and SLR Investment 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.