Correlation Between Cosan SA and Sunoco LP
Can any of the company-specific risk be diversified away by investing in both Cosan SA 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 Cosan SA and Sunoco LP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cosan SA ADR and Sunoco LP, you can compare the effects of market volatilities on Cosan SA 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 Cosan SA with a short position of Sunoco LP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cosan SA and Sunoco LP.
Diversification Opportunities for Cosan SA and Sunoco LP
Weak diversification
The 3 months correlation between Cosan and Sunoco is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Cosan SA ADR and Sunoco LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunoco LP and Cosan SA 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 Cosan SA ADR 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 Cosan SA i.e., Cosan SA and Sunoco LP go up and down completely randomly.
Pair Corralation between Cosan SA and Sunoco LP
Given the investment horizon of 90 days Cosan SA ADR is expected to under-perform the Sunoco LP. In addition to that, Cosan SA is 1.73 times more volatile than Sunoco LP. It trades about -0.21 of its total potential returns per unit of risk. Sunoco LP is currently generating about 0.2 per unit of volatility. If you would invest 5,086 in Sunoco LP on August 23, 2024 and sell it today you would earn a total of 316.00 from holding Sunoco LP or generate 6.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cosan SA ADR vs. Sunoco LP
Performance |
| Timeline |
| Cosan SA ADR |
| Sunoco LP |
Cosan SA and Sunoco LP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cosan SA and Sunoco LP
The main advantage of trading using opposite Cosan SA and Sunoco LP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cosan SA 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.| Cosan SA vs. Delek Energy | Cosan SA vs. Crossamerica Partners LP | Cosan SA vs. Par Pacific Holdings | Cosan SA vs. Valvoline |
| Sunoco LP vs. Delek Energy | Sunoco LP vs. Crossamerica Partners LP | Sunoco LP vs. CVR Energy | Sunoco LP vs. Phillips 66 |
Check out your portfolio center.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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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