Correlation Between Par Pacific and Sunoco LP

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

By analyzing existing cross correlation between Par Pacific Holdings and Sunoco LP, you can compare the effects of market volatilities on Par Pacific 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 Par Pacific with a short position of Sunoco LP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Par Pacific and Sunoco LP.

Diversification Opportunities for Par Pacific and Sunoco LP

0.57

Correlation Coefficient

Par Pacific  Sunoco LP

Very weak diversification

The 3 months correlation between Par and Sunoco is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Par Pacific Holdings and Sunoco LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunoco LP and Par Pacific 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 Par Pacific Holdings 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 Par Pacific i.e., Par Pacific and Sunoco LP go up and down completely randomly.

Pair Corralation between Par Pacific and Sunoco LP

Given the investment horizon of 90 days Par Pacific Holdings is expected to under-perform the Sunoco LP. In addition to that, Par Pacific is 1.47 times more volatile than Sunoco LP. It trades about -0.4 of its total potential returns per unit of risk. Sunoco LP is currently generating about -0.32 per unit of volatility. If you would invest  6,173  in Sunoco LP on January 20, 2024 and sell it today you would lose (736.00) from holding Sunoco LP or give up 11.92% of portfolio value over 90 days.

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

Par Pacific Holdings  vs.  Sunoco LP

Par Pacific Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Par Pacific Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest conflicting performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Sunoco LP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sunoco LP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Sunoco LP is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Par Pacific and Sunoco LP

The main advantage of trading using opposite Par Pacific and Sunoco LP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Par Pacific 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.

The idea behind Par Pacific Holdings and Sunoco LP 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.