Correlation Between Sunoco LP and HF Sinclair

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

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

Diversification Opportunities for Sunoco LP and HF Sinclair

0.01

Correlation Coefficient

Sunoco LP  HF Sinclair

Significant diversification

The 3 months correlation between Sunoco and DINO is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Sunoco LP and HF Sinclair Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HF Sinclair Corp and Sunoco LP 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 Sunoco LP are associated (or correlated) with HF Sinclair. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HF Sinclair Corp has no effect on the direction of Sunoco LP i.e., Sunoco LP and HF Sinclair go up and down completely randomly.

Pair Corralation between Sunoco LP and HF Sinclair

Considering the 90-day investment horizon Sunoco LP is expected to generate 0.49 times more return on investment than HF Sinclair. However, Sunoco LP is 2.02 times less risky than HF Sinclair. It trades about 0.22 of its potential returns per unit of risk. HF Sinclair Corp is currently generating about 0.01 per unit of risk. If you would invest  5,015  in Sunoco LP on December 28, 2024 and sell it today you would earn a total of  845.00  from holding Sunoco LP or generate 16.85% return on investment over 90 days.

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

Sunoco LP  vs.  HF Sinclair Corp

Sunoco LP

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sunoco LP are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Sunoco LP displayed solid returns over the last few months and may actually be approaching a breakup point.

HF Sinclair Corp

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Sunoco LP and HF Sinclair

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

The idea behind Sunoco LP and HF Sinclair Corp 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.