Correlation Between Sunoco LP and Phillips
Can any of the company-specific risk be diversified away by investing in both Sunoco LP and Phillips 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 Phillips into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sunoco LP and Phillips 66, you can compare the effects of market volatilities on Sunoco LP and Phillips 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 Phillips. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunoco LP and Phillips.
Diversification Opportunities for Sunoco LP and Phillips
Very weak diversification
The 3 months correlation between Sunoco and Phillips is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Sunoco LP and Phillips 66 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phillips 66 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 Phillips. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phillips 66 has no effect on the direction of Sunoco LP i.e., Sunoco LP and Phillips go up and down completely randomly.
Pair Corralation between Sunoco LP and Phillips
Considering the 90-day investment horizon Sunoco LP is expected to generate 1.31 times less return on investment than Phillips. In addition to that, Sunoco LP is 1.3 times more volatile than Phillips 66. It trades about 0.28 of its total potential returns per unit of risk. Phillips 66 is currently generating about 0.49 per unit of volatility. If you would invest 11,035 in Phillips 66 on October 20, 2024 and sell it today you would earn a total of 1,018 from holding Phillips 66 or generate 9.23% 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. Phillips 66
Performance |
| Timeline |
| Sunoco LP |
| Phillips 66 |
Sunoco LP and Phillips Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunoco LP and Phillips
The main advantage of trading using opposite Sunoco LP and Phillips positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunoco LP position performs unexpectedly, Phillips 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 Phillips will offset losses from the drop in Phillips' long position.| Sunoco LP vs. Delek Energy | Sunoco LP vs. Crossamerica Partners LP | Sunoco LP vs. CVR Energy | Sunoco LP vs. Phillips 66 |
| Phillips vs. Marathon Petroleum Corp | Phillips vs. HF Sinclair Corp | Phillips vs. PBF Energy | Phillips vs. Sunoco LP |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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