Correlation Between Adams Resources and Star Gas
Can any of the company-specific risk be diversified away by investing in both Adams Resources and Star Gas 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 Adams Resources and Star Gas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adams Resources Energy and Star Gas Partners, you can compare the effects of market volatilities on Adams Resources and Star Gas 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 Adams Resources with a short position of Star Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adams Resources and Star Gas.
Diversification Opportunities for Adams Resources and Star Gas
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Adams and Star is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Adams Resources Energy and Star Gas Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Star Gas Partners and Adams Resources 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 Adams Resources Energy are associated (or correlated) with Star Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Star Gas Partners has no effect on the direction of Adams Resources i.e., Adams Resources and Star Gas go up and down completely randomly.
Pair Corralation between Adams Resources and Star Gas
Allowing for the 90-day total investment horizon Adams Resources Energy is expected to generate 3.63 times more return on investment than Star Gas. However, Adams Resources is 3.63 times more volatile than Star Gas Partners. It trades about 0.22 of its potential returns per unit of risk. Star Gas Partners is currently generating about 0.24 per unit of risk. If you would invest 2,721 in Adams Resources Energy on August 31, 2024 and sell it today you would earn a total of 1,003 from holding Adams Resources Energy or generate 36.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Adams Resources Energy vs. Star Gas Partners
Performance |
| Timeline |
| Adams Resources Energy |
| Star Gas Partners |
Adams Resources and Star Gas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adams Resources and Star Gas
The main advantage of trading using opposite Adams Resources and Star Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adams Resources position performs unexpectedly, Star Gas 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 Star Gas will offset losses from the drop in Star Gas' long position.| Adams Resources vs. PrimeEnergy | Adams Resources vs. Barnwell Industries | Adams Resources vs. Acme United | Adams Resources vs. CKX Lands |
| Star Gas vs. Ultrapar Participacoes SA | Star Gas vs. Par Pacific Holdings | Star Gas vs. Delek Energy | Star Gas vs. Crossamerica Partners LP |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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