Correlation Between Suburban Propane and Cheniere Energy
Can any of the company-specific risk be diversified away by investing in both Suburban Propane and Cheniere Energy 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 Suburban Propane and Cheniere Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Suburban Propane Partners and Cheniere Energy Partners, you can compare the effects of market volatilities on Suburban Propane and Cheniere Energy 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 Suburban Propane with a short position of Cheniere Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Suburban Propane and Cheniere Energy.
Diversification Opportunities for Suburban Propane and Cheniere Energy
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Suburban and Cheniere is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Suburban Propane Partners and Cheniere Energy Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheniere Energy Partners and Suburban Propane 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 Suburban Propane Partners are associated (or correlated) with Cheniere Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheniere Energy Partners has no effect on the direction of Suburban Propane i.e., Suburban Propane and Cheniere Energy go up and down completely randomly.
Pair Corralation between Suburban Propane and Cheniere Energy
Considering the 90-day investment horizon Suburban Propane is expected to generate 6.66 times less return on investment than Cheniere Energy. In addition to that, Suburban Propane is 1.28 times more volatile than Cheniere Energy Partners. It trades about 0.02 of its total potential returns per unit of risk. Cheniere Energy Partners is currently generating about 0.14 per unit of volatility. If you would invest 4,620 in Cheniere Energy Partners on September 1, 2024 and sell it today you would earn a total of 1,222 from holding Cheniere Energy Partners or generate 26.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Suburban Propane Partners vs. Cheniere Energy Partners
Performance |
| Timeline |
| Suburban Propane Partners |
| Cheniere Energy Partners |
Suburban Propane and Cheniere Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Suburban Propane and Cheniere Energy
The main advantage of trading using opposite Suburban Propane and Cheniere Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Suburban Propane position performs unexpectedly, Cheniere Energy 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 Cheniere Energy will offset losses from the drop in Cheniere Energy's long position.| Suburban Propane vs. Northwest Natural Gas | Suburban Propane vs. Atmos Energy | Suburban Propane vs. One Gas | Suburban Propane vs. NiSource |
| Cheniere Energy vs. Plains All American | Cheniere Energy vs. Hess Midstream Partners | Cheniere Energy vs. Plains GP Holdings | Cheniere Energy vs. Antero Midstream Partners |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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