Correlation Between HF Sinclair and Ultrapar Participacoes
Can any of the company-specific risk be diversified away by investing in both HF Sinclair and Ultrapar Participacoes 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 Ultrapar Participacoes 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 Ultrapar Participacoes SA, you can compare the effects of market volatilities on HF Sinclair and Ultrapar Participacoes 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 Ultrapar Participacoes. Check out your portfolio center. Please also check ongoing floating volatility patterns of HF Sinclair and Ultrapar Participacoes.
Diversification Opportunities for HF Sinclair and Ultrapar Participacoes
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between DINO and Ultrapar is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding HF Sinclair Corp and Ultrapar Participacoes SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ultrapar Participacoes 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 Ultrapar Participacoes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ultrapar Participacoes has no effect on the direction of HF Sinclair i.e., HF Sinclair and Ultrapar Participacoes go up and down completely randomly.
Pair Corralation between HF Sinclair and Ultrapar Participacoes
Given the investment horizon of 90 days HF Sinclair Corp is expected to generate 0.92 times more return on investment than Ultrapar Participacoes. However, HF Sinclair Corp is 1.09 times less risky than Ultrapar Participacoes. It trades about -0.05 of its potential returns per unit of risk. Ultrapar Participacoes SA is currently generating about -0.14 per unit of risk. If you would invest 5,379 in HF Sinclair Corp on August 27, 2024 and sell it today you would lose (1,142) from holding HF Sinclair Corp or give up 21.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HF Sinclair Corp vs. Ultrapar Participacoes SA
Performance |
| Timeline |
| HF Sinclair Corp |
| Ultrapar Participacoes |
HF Sinclair and Ultrapar Participacoes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HF Sinclair and Ultrapar Participacoes
The main advantage of trading using opposite HF Sinclair and Ultrapar Participacoes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HF Sinclair position performs unexpectedly, Ultrapar Participacoes 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 Ultrapar Participacoes will offset losses from the drop in Ultrapar Participacoes' long position.| HF Sinclair vs. Delek Energy | HF Sinclair vs. CVR Energy | HF Sinclair vs. Valero Energy | HF Sinclair vs. Marathon Petroleum Corp |
| Ultrapar Participacoes vs. CVR Energy | Ultrapar Participacoes vs. PBF Energy | Ultrapar Participacoes vs. HF Sinclair Corp | Ultrapar Participacoes vs. Par Pacific Holdings |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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