Correlation Between NewJersey Resources and Suburban Propane
Can any of the company-specific risk be diversified away by investing in both NewJersey Resources and Suburban Propane 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 NewJersey Resources and Suburban Propane into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NewJersey Resources and Suburban Propane Partners, you can compare the effects of market volatilities on NewJersey Resources and Suburban Propane 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 NewJersey Resources with a short position of Suburban Propane. Check out your portfolio center. Please also check ongoing floating volatility patterns of NewJersey Resources and Suburban Propane.
Diversification Opportunities for NewJersey Resources and Suburban Propane
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between NewJersey and Suburban is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding NewJersey Resources and Suburban Propane Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suburban Propane Partners and NewJersey 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 NewJersey Resources are associated (or correlated) with Suburban Propane. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suburban Propane Partners has no effect on the direction of NewJersey Resources i.e., NewJersey Resources and Suburban Propane go up and down completely randomly.
Pair Corralation between NewJersey Resources and Suburban Propane
Considering the 90-day investment horizon NewJersey Resources is expected to generate 0.49 times more return on investment than Suburban Propane. However, NewJersey Resources is 2.04 times less risky than Suburban Propane. It trades about 0.39 of its potential returns per unit of risk. Suburban Propane Partners is currently generating about 0.06 per unit of risk. If you would invest 4,639 in NewJersey Resources on August 27, 2024 and sell it today you would earn a total of 465.00 from holding NewJersey Resources or generate 10.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NewJersey Resources vs. Suburban Propane Partners
Performance |
| Timeline |
| NewJersey Resources |
| Suburban Propane Partners |
NewJersey Resources and Suburban Propane Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NewJersey Resources and Suburban Propane
The main advantage of trading using opposite NewJersey Resources and Suburban Propane positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NewJersey Resources position performs unexpectedly, Suburban Propane 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 Suburban Propane will offset losses from the drop in Suburban Propane's long position.| NewJersey Resources vs. Atmos Energy | NewJersey Resources vs. UGI Corporation | NewJersey Resources vs. Chesapeake Utilities | NewJersey Resources vs. Spire Inc |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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