Correlation Between Park Ohio and SUNOCO

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

By analyzing existing cross correlation between Park Ohio Holdings and SUNOCO LOGISTICS PARTNERS, you can compare the effects of market volatilities on Park Ohio and SUNOCO 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 Park Ohio with a short position of SUNOCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Park Ohio and SUNOCO.

Diversification Opportunities for Park Ohio and SUNOCO

0.25

Correlation Coefficient

Park Ohio  SUNOCO

Modest diversification

The 3 months correlation between Park and SUNOCO is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Park Ohio Holdings and SUNOCO LOGISTICS PARTNERS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SUNOCO LOGISTICS PARTNERS and Park Ohio 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 Park Ohio Holdings are associated (or correlated) with SUNOCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SUNOCO LOGISTICS PARTNERS has no effect on the direction of Park Ohio i.e., Park Ohio and SUNOCO go up and down completely randomly.

Pair Corralation between Park Ohio and SUNOCO

Given the investment horizon of 90 days Park Ohio Holdings is expected to generate 1.78 times more return on investment than SUNOCO. However, Park Ohio is 1.78 times more volatile than SUNOCO LOGISTICS PARTNERS. It trades about 0.06 of its potential returns per unit of risk. SUNOCO LOGISTICS PARTNERS is currently generating about -0.01 per unit of risk. If you would invest  1,237  in Park Ohio Holdings on October 10, 2024 and sell it today you would earn a total of  1,192  from holding Park Ohio Holdings or generate 96.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	71.11%
Values	Daily Returns

Park Ohio Holdings  vs.  SUNOCO LOGISTICS PARTNERS

Park Ohio Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Park Ohio Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

SUNOCO LOGISTICS PARTNERS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SUNOCO LOGISTICS PARTNERS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for SUNOCO LOGISTICS PARTNERS investors.

Pair Trading with Park Ohio and SUNOCO

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

The idea behind Park Ohio Holdings and SUNOCO LOGISTICS PARTNERS 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.