Correlation Between Suburban Propane and National Rural

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

Diversification Opportunities for Suburban Propane and National Rural

0.74

Correlation Coefficient

Suburban Propane  National Rural

Poor diversification

The 3 months correlation between Suburban and National is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Suburban Propane Partners and National Rural Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Rural Utilities 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 National Rural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Rural Utilities has no effect on the direction of Suburban Propane i.e., Suburban Propane and National Rural go up and down completely randomly.

Pair Corralation between Suburban Propane and National Rural

Considering the 90-day investment horizon Suburban Propane Partners is expected to under-perform the National Rural. In addition to that, Suburban Propane is 1.72 times more volatile than National Rural Utilities. It trades about -0.2 of its total potential returns per unit of risk. National Rural Utilities is currently generating about -0.02 per unit of volatility. If you would invest  2,496  in National Rural Utilities on January 29, 2024 and sell it today you would lose (12.00) from holding National Rural Utilities or give up 0.48% of portfolio value over 90 days.

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

Suburban Propane Partners  vs.  National Rural Utilities

Suburban Propane Partners

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Suburban Propane Partners are ranked lower than 2 (%) 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 latest stock price confusion, may contribute to short-horizon losses for the traders.

National Rural Utilities

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days National Rural Utilities has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, National Rural is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Suburban Propane and National Rural

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

The idea behind Suburban Propane Partners and National Rural Utilities 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.