Correlation Between Sunoco LP and Icahn Enterprises

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

By analyzing existing cross correlation between Sunoco LP and Icahn Enterprises LP, you can compare the effects of market volatilities on Sunoco LP and Icahn Enterprises 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 Icahn Enterprises. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunoco LP and Icahn Enterprises.

Diversification Opportunities for Sunoco LP and Icahn Enterprises

-0.5

Correlation Coefficient

Sunoco LP  Icahn Enterprises

Very good diversification

The 3 months correlation between Sunoco and Icahn is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Sunoco LP and Icahn Enterprises LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icahn Enterprises 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 Icahn Enterprises. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icahn Enterprises has no effect on the direction of Sunoco LP i.e., Sunoco LP and Icahn Enterprises go up and down completely randomly.

Pair Corralation between Sunoco LP and Icahn Enterprises

Considering the 90-day investment horizon Sunoco LP is expected to generate 1.88 times less return on investment than Icahn Enterprises. But when comparing it to its historical volatility, Sunoco LP is 2.79 times less risky than Icahn Enterprises. It trades about 0.03 of its potential returns per unit of risk. Icahn Enterprises LP is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,037  in Icahn Enterprises LP on September 13, 2024 and sell it today you would lose (4.00) from holding Icahn Enterprises LP or give up 0.39% of portfolio value over 90 days.

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

Sunoco LP  vs.  Icahn Enterprises LP

Sunoco LP

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sunoco LP are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Icahn Enterprises

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Icahn Enterprises LP are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, Icahn Enterprises is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Sunoco LP and Icahn Enterprises

The main advantage of trading using opposite Sunoco LP and Icahn Enterprises positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunoco LP position performs unexpectedly, Icahn Enterprises 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 Icahn Enterprises will offset losses from the drop in Icahn Enterprises' long position.

The idea behind Sunoco LP and Icahn Enterprises 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.