Correlation Between Valvoline and Sunoco LP
Can any of the company-specific risk be diversified away by investing in both Valvoline 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 Valvoline and Sunoco LP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Valvoline and Sunoco LP, you can compare the effects of market volatilities on Valvoline 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 Valvoline with a short position of Sunoco LP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valvoline and Sunoco LP.
Diversification Opportunities for Valvoline and Sunoco LP
Good diversification
The 3 months correlation between Valvoline and Sunoco is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Valvoline and Sunoco LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunoco LP and Valvoline 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 Valvoline 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 Valvoline i.e., Valvoline and Sunoco LP go up and down completely randomly.
Pair Corralation between Valvoline and Sunoco LP
Considering the 90-day investment horizon Valvoline is expected to generate 1.26 times more return on investment than Sunoco LP. However, Valvoline is 1.26 times more volatile than Sunoco LP. It trades about 0.33 of its potential returns per unit of risk. Sunoco LP is currently generating about 0.32 per unit of risk. If you would invest 3,487 in Valvoline on November 9, 2024 and sell it today you would earn a total of 471.00 from holding Valvoline or generate 13.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Valvoline vs. Sunoco LP
Performance |
| Timeline |
| Valvoline |
| Sunoco LP |
Valvoline and Sunoco LP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Valvoline and Sunoco LP
The main advantage of trading using opposite Valvoline and Sunoco LP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valvoline 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.| Valvoline vs. Cosan SA ADR | Valvoline vs. Delek Energy | Valvoline vs. Crossamerica Partners LP | Valvoline vs. Par Pacific Holdings |
| 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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