Correlation Between BP Prudhoe and HF Sinclair

Can any of the company-specific risk be diversified away by investing in both BP Prudhoe and HF Sinclair 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 BP Prudhoe and HF Sinclair into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BP Prudhoe Bay and HF Sinclair Corp, you can compare the effects of market volatilities on BP Prudhoe and HF Sinclair 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 BP Prudhoe with a short position of HF Sinclair. Check out your portfolio center. Please also check ongoing floating volatility patterns of BP Prudhoe and HF Sinclair.

Diversification Opportunities for BP Prudhoe and HF Sinclair

0.68

Correlation Coefficient

BP Prudhoe  HF Sinclair

Poor diversification

The 3 months correlation between BPT and DINO is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding BP Prudhoe Bay and HF Sinclair Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HF Sinclair Corp and BP Prudhoe 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 BP Prudhoe Bay are associated (or correlated) with HF Sinclair. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HF Sinclair Corp has no effect on the direction of BP Prudhoe i.e., BP Prudhoe and HF Sinclair go up and down completely randomly.

Pair Corralation between BP Prudhoe and HF Sinclair

Considering the 90-day investment horizon BP Prudhoe Bay is expected to under-perform the HF Sinclair. In addition to that, BP Prudhoe is 2.34 times more volatile than HF Sinclair Corp. It trades about -0.1 of its total potential returns per unit of risk. HF Sinclair Corp is currently generating about -0.09 per unit of volatility. If you would invest  4,690  in HF Sinclair Corp on September 1, 2024 and sell it today you would lose (597.00) from holding HF Sinclair Corp or give up 12.73% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

BP Prudhoe Bay  vs.  HF Sinclair Corp

BP Prudhoe Bay

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BP Prudhoe Bay has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

HF Sinclair Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HF Sinclair Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with BP Prudhoe and HF Sinclair

The main advantage of trading using opposite BP Prudhoe and HF Sinclair positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BP Prudhoe position performs unexpectedly, HF Sinclair 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 HF Sinclair will offset losses from the drop in HF Sinclair's long position.

The idea behind BP Prudhoe Bay and HF Sinclair Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.