Correlation Between PBF Energy and Par Pacific

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

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

Diversification Opportunities for PBF Energy and Par Pacific

-0.19

Correlation Coefficient

PBF Energy  Par Pacific

Good diversification

The 3 months correlation between PBF and Par is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding PBF Energy and Par Pacific Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Par Pacific Holdings and PBF Energy 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 PBF Energy are associated (or correlated) with Par Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Par Pacific Holdings has no effect on the direction of PBF Energy i.e., PBF Energy and Par Pacific go up and down completely randomly.

Pair Corralation between PBF Energy and Par Pacific

Considering the 90-day investment horizon PBF Energy is expected to generate 1.06 times more return on investment than Par Pacific. However, PBF Energy is 1.06 times more volatile than Par Pacific Holdings. It trades about 0.08 of its potential returns per unit of risk. Par Pacific Holdings is currently generating about -0.01 per unit of risk. If you would invest  4,330  in PBF Energy on February 6, 2024 and sell it today you would earn a total of  900.00  from holding PBF Energy or generate 20.79% return on investment over 90 days.

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

PBF Energy  vs.  Par Pacific Holdings

PBF Energy

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PBF Energy are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting fundamental drivers, PBF Energy may actually be approaching a critical reversion point that can send shares even higher in June 2024.

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 conflicting performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in June 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with PBF Energy and Par Pacific

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

The idea behind PBF Energy and Par Pacific Holdings 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.