Correlation Between Icahn Enterprises and Sunoco LP

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

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

Diversification Opportunities for Icahn Enterprises and Sunoco LP

-0.43

Correlation Coefficient

Icahn Enterprises  Sunoco LP

Very good diversification

The 3 months correlation between Icahn and Sunoco is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Icahn Enterprises LP and Sunoco LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunoco LP and Icahn Enterprises 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 Icahn Enterprises LP are associated (or correlated) with Sunoco LP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunoco LP has no effect on the direction of Icahn Enterprises i.e., Icahn Enterprises and Sunoco LP go up and down completely randomly.

Pair Corralation between Icahn Enterprises and Sunoco LP

Considering the 90-day investment horizon Icahn Enterprises LP is expected to under-perform the Sunoco LP. In addition to that, Icahn Enterprises is 2.52 times more volatile than Sunoco LP. It trades about -0.05 of its total potential returns per unit of risk. Sunoco LP is currently generating about 0.05 per unit of volatility. If you would invest  3,754  in Sunoco LP on September 24, 2024 and sell it today you would earn a total of  1,390  from holding Sunoco LP or generate 37.03% return on investment over 90 days.

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

Icahn Enterprises LP  vs.  Sunoco LP

Icahn Enterprises

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Icahn Enterprises LP 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 technical and fundamental indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Sunoco LP

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Icahn Enterprises and Sunoco LP

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

The idea behind Icahn Enterprises LP and Sunoco 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 Transaction History module to view history of all your transactions and understand their impact on performance.