Correlation Between Suburban Propane and Turning Point
Can any of the company-specific risk be diversified away by investing in both Suburban Propane and Turning Point 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 Turning Point 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 Turning Point Brands, you can compare the effects of market volatilities on Suburban Propane and Turning Point 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 Turning Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of Suburban Propane and Turning Point.
Diversification Opportunities for Suburban Propane and Turning Point
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Suburban and Turning is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Suburban Propane Partners and Turning Point Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Turning Point Brands 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 Turning Point. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Turning Point Brands has no effect on the direction of Suburban Propane i.e., Suburban Propane and Turning Point go up and down completely randomly.
Pair Corralation between Suburban Propane and Turning Point
Considering the 90-day investment horizon Suburban Propane is expected to generate 2.82 times less return on investment than Turning Point. But when comparing it to its historical volatility, Suburban Propane Partners is 1.18 times less risky than Turning Point. It trades about 0.05 of its potential returns per unit of risk. Turning Point Brands is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 2,046 in Turning Point Brands on September 3, 2024 and sell it today you would earn a total of 4,144 from holding Turning Point Brands or generate 202.54% 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. Turning Point Brands
Performance |
| Timeline |
| Suburban Propane Partners |
| Turning Point Brands |
Suburban Propane and Turning Point Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Suburban Propane and Turning Point
The main advantage of trading using opposite Suburban Propane and Turning Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Suburban Propane position performs unexpectedly, Turning Point 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 Turning Point will offset losses from the drop in Turning Point's long position.| Suburban Propane vs. Northwest Natural Gas | Suburban Propane vs. NewJersey Resources | Suburban Propane vs. Atmos Energy | Suburban Propane vs. Chesapeake Utilities |
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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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