Correlation Between Sunoco LP and Eneos Holdings

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

By analyzing existing cross correlation between Sunoco LP and Eneos Holdings ADR, you can compare the effects of market volatilities on Sunoco LP and Eneos Holdings 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 Eneos Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunoco LP and Eneos Holdings.

Diversification Opportunities for Sunoco LP and Eneos Holdings

0.14

Correlation Coefficient

Sunoco LP  Eneos Holdings

Average diversification

The 3 months correlation between Sunoco and Eneos is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Sunoco LP and Eneos Holdings ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eneos Holdings ADR 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 Eneos Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eneos Holdings ADR has no effect on the direction of Sunoco LP i.e., Sunoco LP and Eneos Holdings go up and down completely randomly.

Pair Corralation between Sunoco LP and Eneos Holdings

Considering the 90-day investment horizon Sunoco LP is expected to generate 2.22 times less return on investment than Eneos Holdings. But when comparing it to its historical volatility, Sunoco LP is 5.17 times less risky than Eneos Holdings. It trades about 0.18 of its potential returns per unit of risk. Eneos Holdings ADR is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  999.00  in Eneos Holdings ADR on December 25, 2024 and sell it today you would earn a total of  187.00  from holding Eneos Holdings ADR or generate 18.72% 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.  Eneos Holdings ADR

Sunoco LP

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sunoco LP are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Sunoco LP displayed solid returns over the last few months and may actually be approaching a breakup point.

Eneos Holdings ADR

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Eneos Holdings ADR are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile essential indicators, Eneos Holdings showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sunoco LP and Eneos Holdings

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

The idea behind Sunoco LP and Eneos Holdings ADR 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.