Correlation Between Par Pacific and Blue Dolphin

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

Diversification Opportunities for Par Pacific and Blue Dolphin

-0.58

Correlation Coefficient

Par Pacific  Blue Dolphin

Excellent diversification

The 3 months correlation between Par and Blue is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Par Pacific Holdings and Blue Dolphin Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Dolphin Energy 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 Blue Dolphin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Dolphin Energy has no effect on the direction of Par Pacific i.e., Par Pacific and Blue Dolphin go up and down completely randomly.

Pair Corralation between Par Pacific and Blue Dolphin

Given the investment horizon of 90 days Par Pacific Holdings is expected to under-perform the Blue Dolphin. But the stock apears to be less risky and, when comparing its historical volatility, Par Pacific Holdings is 3.45 times less risky than Blue Dolphin. The stock trades about -0.01 of its potential returns per unit of risk. The Blue Dolphin Energy is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  205.00  in Blue Dolphin Energy on August 30, 2024 and sell it today you would earn a total of  401.00  from holding Blue Dolphin Energy or generate 195.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	13.67%
Values	Daily Returns

Par Pacific Holdings  vs.  Blue Dolphin Energy

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 December 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Blue Dolphin Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blue Dolphin Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Blue Dolphin is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Par Pacific and Blue Dolphin

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

The idea behind Par Pacific Holdings and Blue Dolphin Energy 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.

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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.