Correlation Between Crossamerica Partners and Ultrapar Participacoes

Can any of the company-specific risk be diversified away by investing in both Crossamerica Partners and Ultrapar Participacoes 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 Crossamerica Partners and Ultrapar Participacoes into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Crossamerica Partners LP and Ultrapar Participacoes SA, you can compare the effects of market volatilities on Crossamerica Partners and Ultrapar Participacoes 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 Crossamerica Partners with a short position of Ultrapar Participacoes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crossamerica Partners and Ultrapar Participacoes.

Diversification Opportunities for Crossamerica Partners and Ultrapar Participacoes

-0.34

Correlation Coefficient

Crossamerica Partners  Ultrapar Participacoes

Very good diversification

The 3 months correlation between Crossamerica and Ultrapar is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Crossamerica Partners LP and Ultrapar Participacoes SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ultrapar Participacoes and Crossamerica Partners 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 Crossamerica Partners LP are associated (or correlated) with Ultrapar Participacoes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ultrapar Participacoes has no effect on the direction of Crossamerica Partners i.e., Crossamerica Partners and Ultrapar Participacoes go up and down completely randomly.

Pair Corralation between Crossamerica Partners and Ultrapar Participacoes

Given the investment horizon of 90 days Crossamerica Partners LP is expected to generate 0.56 times more return on investment than Ultrapar Participacoes. However, Crossamerica Partners LP is 1.79 times less risky than Ultrapar Participacoes. It trades about 0.09 of its potential returns per unit of risk. Ultrapar Participacoes SA is currently generating about -0.23 per unit of risk. If you would invest  2,060  in Crossamerica Partners LP on September 15, 2024 and sell it today you would earn a total of  161.00  from holding Crossamerica Partners LP or generate 7.82% return on investment over 90 days.

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

Crossamerica Partners LP  vs.  Ultrapar Participacoes SA

Crossamerica Partners

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Crossamerica Partners LP are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Crossamerica Partners may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Ultrapar Participacoes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ultrapar Participacoes SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Crossamerica Partners and Ultrapar Participacoes

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

The idea behind Crossamerica Partners LP and Ultrapar Participacoes SA 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.