Correlation Between Sunoco LP and PBF Energy
Can any of the company-specific risk be diversified away by investing in both Sunoco LP and PBF Energy 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 PBF Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sunoco LP and PBF Energy, you can compare the effects of market volatilities on Sunoco LP and PBF Energy 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 PBF Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunoco LP and PBF Energy.
Diversification Opportunities for Sunoco LP and PBF Energy
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sunoco and PBF is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Sunoco LP and PBF Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PBF Energy 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 PBF Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PBF Energy has no effect on the direction of Sunoco LP i.e., Sunoco LP and PBF Energy go up and down completely randomly.
Pair Corralation between Sunoco LP and PBF Energy
Considering the 90-day investment horizon Sunoco LP is expected to generate 0.51 times more return on investment than PBF Energy. However, Sunoco LP is 1.96 times less risky than PBF Energy. It trades about 0.2 of its potential returns per unit of risk. PBF Energy is currently generating about -0.02 per unit of risk. 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 | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sunoco LP vs. PBF Energy
Performance |
| Timeline |
| Sunoco LP |
| PBF Energy |
Sunoco LP and PBF Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunoco LP and PBF Energy
The main advantage of trading using opposite Sunoco LP and PBF Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunoco LP position performs unexpectedly, PBF Energy 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 PBF Energy will offset losses from the drop in PBF Energy's long position.| Sunoco LP vs. Delek Energy | Sunoco LP vs. Crossamerica Partners LP | Sunoco LP vs. CVR Energy | Sunoco LP vs. Phillips 66 |
| PBF Energy vs. Delek Energy | PBF Energy vs. CVR Energy | PBF Energy vs. Valero Energy | PBF Energy vs. Marathon Petroleum Corp |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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