Correlation Between Suburban Propane and Virtus Investment

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

Diversification Opportunities for Suburban Propane and Virtus Investment

0.61

Correlation Coefficient

Suburban Propane  Virtus Investment

Poor diversification

The 3 months correlation between Suburban and Virtus is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Suburban Propane Partners and Virtus Investment Partners, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Investment 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 Virtus Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Investment has no effect on the direction of Suburban Propane i.e., Suburban Propane and Virtus Investment go up and down completely randomly.

Pair Corralation between Suburban Propane and Virtus Investment

Considering the 90-day investment horizon Suburban Propane Partners is expected to generate 0.84 times more return on investment than Virtus Investment. However, Suburban Propane Partners is 1.19 times less risky than Virtus Investment. It trades about 0.04 of its potential returns per unit of risk. Virtus Investment Partners, is currently generating about 0.02 per unit of risk. If you would invest  1,364  in Suburban Propane Partners on October 10, 2024 and sell it today you would earn a total of  400.00  from holding Suburban Propane Partners or generate 29.33% 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.  Virtus Investment Partners,

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.

Virtus Investment

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Investment Partners, are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Virtus Investment may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Suburban Propane and Virtus Investment

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

The idea behind Suburban Propane Partners and Virtus Investment Partners, 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.