Correlation Between Crossamerica Partners and USA Compression

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

Diversification Opportunities for Crossamerica Partners and USA Compression

0.42

Correlation Coefficient

Crossamerica Partners  USA Compression

Very weak diversification

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

Pair Corralation between Crossamerica Partners and USA Compression

Given the investment horizon of 90 days Crossamerica Partners LP is expected to under-perform the USA Compression. But the stock apears to be less risky and, when comparing its historical volatility, Crossamerica Partners LP is 1.04 times less risky than USA Compression. The stock trades about -0.08 of its potential returns per unit of risk. The USA Compression Partners is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2,399  in USA Compression Partners on February 23, 2024 and sell it today you would earn a total of  21.00  from holding USA Compression Partners or generate 0.88% return on investment over 90 days.

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

Crossamerica Partners LP  vs.  USA Compression Partners

Crossamerica Partners

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Crossamerica Partners LP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

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.

Pair Trading with Crossamerica Partners and USA Compression

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

The idea behind Crossamerica Partners LP and USA Compression Partners 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.