Correlation Between Suburban Propane and Hawkins

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

Diversification Opportunities for Suburban Propane and Hawkins

0.42

Correlation Coefficient

Suburban Propane  Hawkins

Very weak diversification

The 3 months correlation between Suburban and Hawkins is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Suburban Propane Partners and Hawkins in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hawkins 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 Hawkins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hawkins has no effect on the direction of Suburban Propane i.e., Suburban Propane and Hawkins go up and down completely randomly.

Pair Corralation between Suburban Propane and Hawkins

Considering the 90-day investment horizon Suburban Propane Partners is expected to under-perform the Hawkins. But the stock apears to be less risky and, when comparing its historical volatility, Suburban Propane Partners is 1.49 times less risky than Hawkins. The stock trades about 0.0 of its potential returns per unit of risk. The Hawkins is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  11,984  in Hawkins on September 21, 2024 and sell it today you would earn a total of  414.00  from holding Hawkins or generate 3.45% return on investment over 90 days.

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

Suburban Propane Partners  vs.  Hawkins

Suburban Propane Partners

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Suburban Propane Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Suburban Propane is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Hawkins

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hawkins are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward-looking signals, Hawkins is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Suburban Propane and Hawkins

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

The idea behind Suburban Propane Partners and Hawkins 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.