Correlation Between NYSE Composite and Star Gas
Can any of the company-specific risk be diversified away by investing in both NYSE Composite 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 NYSE Composite and Star Gas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Star Gas Partners, you can compare the effects of market volatilities on NYSE Composite 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 NYSE Composite with a short position of Star Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Star Gas.
Diversification Opportunities for NYSE Composite and Star Gas
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between NYSE and Star is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite 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 NYSE Composite 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 NYSE Composite 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 NYSE Composite i.e., NYSE Composite and Star Gas go up and down completely randomly.
Pair Corralation between NYSE Composite and Star Gas
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.26 times more return on investment than Star Gas. However, NYSE Composite is 3.83 times less risky than Star Gas. It trades about 0.14 of its potential returns per unit of risk. Star Gas Partners is currently generating about 0.03 per unit of risk. If you would invest 1,592,915 in NYSE Composite on August 24, 2024 and sell it today you would earn a total of 403,915 from holding NYSE Composite or generate 25.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Star Gas Partners
Performance |
| Timeline |
NYSE Composite and Star Gas Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Star Gas Partners
Pair trading matchups for Star Gas
Pair Trading with NYSE Composite and Star Gas
The main advantage of trading using opposite NYSE Composite and Star Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite 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.| NYSE Composite vs. Awilco Drilling PLC | NYSE Composite vs. AKITA Drilling | NYSE Composite vs. SunOpta | NYSE Composite vs. Delek Drilling |
| 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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