Correlation Between USA Compression and Crossamerica Partners

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

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

Diversification Opportunities for USA Compression and Crossamerica Partners

-0.08

Correlation Coefficient

USA Compression  Crossamerica Partners

Good diversification

The 3 months correlation between USA and Crossamerica is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding USA Compression Partners and Crossamerica Partners LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crossamerica Partners and USA Compression 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 USA Compression Partners are associated (or correlated) with Crossamerica Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crossamerica Partners has no effect on the direction of USA Compression i.e., USA Compression and Crossamerica Partners go up and down completely randomly.

Pair Corralation between USA Compression and Crossamerica Partners

Given the investment horizon of 90 days USA Compression is expected to generate 4.22 times less return on investment than Crossamerica Partners. In addition to that, USA Compression is 1.05 times more volatile than Crossamerica Partners LP. It trades about 0.02 of its total potential returns per unit of risk. Crossamerica Partners LP is currently generating about 0.09 per unit of volatility. If you would invest  2,021  in Crossamerica Partners LP on September 29, 2024 and sell it today you would earn a total of  161.00  from holding Crossamerica Partners LP or generate 7.97% return on investment over 90 days.

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

USA Compression Partners  vs.  Crossamerica Partners LP

USA Compression Partners

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in USA Compression Partners are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, USA Compression is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

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 inconsistent basic indicators, Crossamerica Partners may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with USA Compression and Crossamerica Partners

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

The idea behind USA Compression Partners and Crossamerica Partners LP 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.