Correlation Between USA Compression and Crossamerica Partners
Can any of the company-specific risk be diversified away by investing in both USA Compression 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 USA Compression and Crossamerica Partners into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between USA Compression Partners and Crossamerica Partners LP, you can compare the effects of market volatilities on USA Compression 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 USA Compression with a short position of Crossamerica Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of USA Compression and Crossamerica Partners.
Diversification Opportunities for USA Compression and Crossamerica Partners
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between USA and Crossamerica is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding USA Compression Partners and Crossamerica Partners LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crossamerica Partners and USA Compression 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 USA Compression Partners 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 USA Compression i.e., USA Compression and Crossamerica Partners go up and down completely randomly.
Pair Corralation between USA Compression and Crossamerica Partners
Given the investment horizon of 90 days USA Compression Partners is expected to generate 1.01 times more return on investment than Crossamerica Partners. However, USA Compression is 1.01 times more volatile than Crossamerica Partners LP. It trades about -0.01 of its potential returns per unit of risk. Crossamerica Partners LP is currently generating about -0.05 per unit of risk. If you would invest 2,445 in USA Compression Partners on February 29, 2024 and sell it today you would lose (41.00) from holding USA Compression Partners or give up 1.68% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
USA Compression Partners vs. Crossamerica Partners LP
Performance |
Timeline |
USA Compression Partners |
Crossamerica Partners |
USA Compression and Crossamerica Partners Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with USA Compression and Crossamerica Partners
The main advantage of trading using opposite USA Compression and Crossamerica Partners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if USA Compression 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.USA Compression vs. NOV Inc | USA Compression vs. Weatherford International PLC | USA Compression vs. Tenaris SA ADR | USA Compression vs. Now Inc |
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Check out your portfolio center.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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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