Correlation Between Suburban Propane and Union Electric
Can any of the company-specific risk be diversified away by investing in both Suburban Propane and Union Electric 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 Union Electric 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 Union Electric, you can compare the effects of market volatilities on Suburban Propane and Union Electric 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 Union Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Suburban Propane and Union Electric.
Diversification Opportunities for Suburban Propane and Union Electric
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Suburban and Union is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Suburban Propane Partners and Union Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Union Electric 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 Union Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Union Electric has no effect on the direction of Suburban Propane i.e., Suburban Propane and Union Electric go up and down completely randomly.
Pair Corralation between Suburban Propane and Union Electric
Considering the 90-day investment horizon Suburban Propane Partners is expected to generate 0.84 times more return on investment than Union Electric. However, Suburban Propane Partners is 1.19 times less risky than Union Electric. It trades about 0.45 of its potential returns per unit of risk. Union Electric is currently generating about 0.22 per unit of risk. If you would invest 1,767 in Suburban Propane Partners on November 3, 2024 and sell it today you would earn a total of 346.00 from holding Suburban Propane Partners or generate 19.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Suburban Propane Partners vs. Union Electric
Performance |
| Timeline |
| Suburban Propane Partners |
| Union Electric |
Suburban Propane and Union Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Suburban Propane and Union Electric
The main advantage of trading using opposite Suburban Propane and Union Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Suburban Propane position performs unexpectedly, Union Electric 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 Union Electric will offset losses from the drop in Union Electric's long position.| Suburban Propane vs. Northwest Natural Gas | Suburban Propane vs. NewJersey Resources | Suburban Propane vs. Atmos Energy | Suburban Propane vs. Chesapeake Utilities |
| Union Electric vs. BK Technologies | Union Electric vs. Zhihu Inc ADR | Union Electric vs. Cheche Group Class | Union Electric vs. Olympic Steel |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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