Correlation Between Near and Crossamerica Partners

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

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

Diversification Opportunities for Near and Crossamerica Partners

0.25

Correlation Coefficient

Near  Crossamerica Partners

Modest diversification

The 3 months correlation between Near and Crossamerica is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Near and Crossamerica Partners LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crossamerica Partners and Near 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 Near 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 Near i.e., Near and Crossamerica Partners go up and down completely randomly.

Pair Corralation between Near and Crossamerica Partners

Assuming the 90 days trading horizon Near is expected to generate 7.08 times more return on investment than Crossamerica Partners. However, Near is 7.08 times more volatile than Crossamerica Partners LP. It trades about 0.04 of its potential returns per unit of risk. Crossamerica Partners LP is currently generating about 0.07 per unit of risk. If you would invest  621.00  in Near on January 31, 2024 and sell it today you would earn a total of  4.00  from holding Near or generate 0.64% return on investment over 90 days.

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

Near  vs.  Crossamerica Partners LP

Near

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Near are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Near exhibited solid returns over the last few months and may actually be approaching a breakup point.

Crossamerica Partners

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Crossamerica Partners LP are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Crossamerica Partners is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Near and Crossamerica Partners

The main advantage of trading using opposite Near and Crossamerica Partners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Near 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 Near 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.