Correlation Between HF Sinclair and East Africa
Can any of the company-specific risk be diversified away by investing in both HF Sinclair and East Africa 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 HF Sinclair and East Africa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HF Sinclair Corp and East Africa Metals, you can compare the effects of market volatilities on HF Sinclair and East Africa 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 HF Sinclair with a short position of East Africa. Check out your portfolio center. Please also check ongoing floating volatility patterns of HF Sinclair and East Africa.
Diversification Opportunities for HF Sinclair and East Africa
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between DINO and East is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding HF Sinclair Corp and East Africa Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on East Africa Metals and HF Sinclair 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 HF Sinclair Corp are associated (or correlated) with East Africa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of East Africa Metals has no effect on the direction of HF Sinclair i.e., HF Sinclair and East Africa go up and down completely randomly.
Pair Corralation between HF Sinclair and East Africa
Given the investment horizon of 90 days HF Sinclair Corp is expected to under-perform the East Africa. But the stock apears to be less risky and, when comparing its historical volatility, HF Sinclair Corp is 32.9 times less risky than East Africa. The stock trades about -0.01 of its potential returns per unit of risk. The East Africa Metals is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 10.00 in East Africa Metals on September 13, 2024 and sell it today you would earn a total of 1.00 from holding East Africa Metals or generate 10.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HF Sinclair Corp vs. East Africa Metals
Performance |
| Timeline |
| HF Sinclair Corp |
| East Africa Metals |
HF Sinclair and East Africa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HF Sinclair and East Africa
The main advantage of trading using opposite HF Sinclair and East Africa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HF Sinclair position performs unexpectedly, East Africa 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 East Africa will offset losses from the drop in East Africa's long position.| HF Sinclair vs. Delek Energy | HF Sinclair vs. CVR Energy | HF Sinclair vs. Valero Energy | HF Sinclair vs. Marathon Petroleum Corp |
| East Africa vs. Advantage Solutions | East Africa vs. Atlas Corp | East Africa vs. PureCycle Technologies | East Africa vs. WM Technology |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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