Correlation Between Sunoco LP and Ultrapar Participacoes

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

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

Diversification Opportunities for Sunoco LP and Ultrapar Participacoes

-0.16

Correlation Coefficient

Sunoco LP  Ultrapar Participacoes

Good diversification

The 3 months correlation between Sunoco and Ultrapar is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Sunoco LP and Ultrapar Participacoes SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ultrapar Participacoes 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 Ultrapar Participacoes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ultrapar Participacoes has no effect on the direction of Sunoco LP i.e., Sunoco LP and Ultrapar Participacoes go up and down completely randomly.

Pair Corralation between Sunoco LP and Ultrapar Participacoes

Considering the 90-day investment horizon Sunoco LP is expected to generate 0.53 times more return on investment than Ultrapar Participacoes. However, Sunoco LP is 1.88 times less risky than Ultrapar Participacoes. It trades about 0.06 of its potential returns per unit of risk. Ultrapar Participacoes SA is currently generating about -0.17 per unit of risk. If you would invest  5,224  in Sunoco LP on August 31, 2024 and sell it today you would earn a total of  239.00  from holding Sunoco LP or generate 4.58% return on investment over 90 days.

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

Sunoco LP  vs.  Ultrapar Participacoes SA

Sunoco LP

Risk-Adjusted Performance

4 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sunoco LP are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Sunoco LP is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Ultrapar Participacoes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ultrapar Participacoes SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Stock's technical and fundamental 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.

Pair Trading with Sunoco LP and Ultrapar Participacoes

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

The idea behind Sunoco LP and Ultrapar Participacoes SA 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..