Correlation Between Par Pacific and HF Sinclair

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

By analyzing existing cross correlation between Par Pacific Holdings and HF Sinclair Corp, you can compare the effects of market volatilities on Par Pacific and HF Sinclair 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 Par Pacific with a short position of HF Sinclair. Check out your portfolio center. Please also check ongoing floating volatility patterns of Par Pacific and HF Sinclair.

Diversification Opportunities for Par Pacific and HF Sinclair

0.52

Correlation Coefficient

Par Pacific  HF Sinclair

Very weak diversification

The 3 months correlation between Par and DINO is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Par Pacific Holdings and HF Sinclair Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HF Sinclair Corp and Par Pacific 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 Par Pacific Holdings are associated (or correlated) with HF Sinclair. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HF Sinclair Corp has no effect on the direction of Par Pacific i.e., Par Pacific and HF Sinclair go up and down completely randomly.

Pair Corralation between Par Pacific and HF Sinclair

Given the investment horizon of 90 days Par Pacific Holdings is expected to under-perform the HF Sinclair. In addition to that, Par Pacific is 1.88 times more volatile than HF Sinclair Corp. It trades about -0.26 of its total potential returns per unit of risk. HF Sinclair Corp is currently generating about -0.21 per unit of volatility. If you would invest  6,121  in HF Sinclair Corp on January 25, 2024 and sell it today you would lose (401.00) from holding HF Sinclair Corp or give up 6.55% of portfolio value over 90 days.

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

Par Pacific Holdings  vs.  HF Sinclair Corp

Par Pacific Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Par Pacific Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Par Pacific is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

HF Sinclair Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in HF Sinclair Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, HF Sinclair may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Par Pacific and HF Sinclair

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

The idea behind Par Pacific Holdings and HF Sinclair Corp 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.