Correlation Between Suburban Propane and Artisan Partners

Can any of the company-specific risk be diversified away by investing in both Suburban Propane and Artisan Partners 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 Artisan Partners 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 Artisan Partners Asset, you can compare the effects of market volatilities on Suburban Propane and Artisan Partners 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 Artisan Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of Suburban Propane and Artisan Partners.

Diversification Opportunities for Suburban Propane and Artisan Partners

0.77

Correlation Coefficient

Suburban Propane  Artisan Partners

Poor diversification

The 3 months correlation between Suburban and Artisan is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Suburban Propane Partners and Artisan Partners Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Artisan Partners Asset 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 Artisan Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Artisan Partners Asset has no effect on the direction of Suburban Propane i.e., Suburban Propane and Artisan Partners go up and down completely randomly.

Pair Corralation between Suburban Propane and Artisan Partners

Considering the 90-day investment horizon Suburban Propane is expected to generate 2.32 times less return on investment than Artisan Partners. But when comparing it to its historical volatility, Suburban Propane Partners is 1.03 times less risky than Artisan Partners. It trades about 0.06 of its potential returns per unit of risk. Artisan Partners Asset is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  4,080  in Artisan Partners Asset on September 16, 2024 and sell it today you would earn a total of  616.00  from holding Artisan Partners Asset or generate 15.1% 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.  Artisan Partners Asset

Suburban Propane Partners

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Suburban Propane Partners are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Suburban Propane is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Artisan Partners Asset

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Artisan Partners Asset are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Artisan Partners displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Suburban Propane and Artisan Partners

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

The idea behind Suburban Propane Partners and Artisan Partners Asset 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.