Correlation Between Plains All and Sunoco LP

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

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

Diversification Opportunities for Plains All and Sunoco LP

0.32

Correlation Coefficient

Plains All  Sunoco LP

Weak diversification

The 3 months correlation between Plains and Sunoco is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Plains All American and Sunoco LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunoco LP and Plains All 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 Plains All American 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 Plains All i.e., Plains All and Sunoco LP go up and down completely randomly.

Pair Corralation between Plains All and Sunoco LP

Considering the 90-day investment horizon Plains All American is expected to under-perform the Sunoco LP. But the stock apears to be less risky and, when comparing its historical volatility, Plains All American is 1.25 times less risky than Sunoco LP. The stock trades about -0.19 of its potential returns per unit of risk. The Sunoco LP is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  5,157  in Sunoco LP on July 21, 2025 and sell it today you would earn a total of  247.00  from holding Sunoco LP or generate 4.79% return on investment over 90 days.

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

Plains All American  vs.  Sunoco LP

Plains All American

Risk-Adjusted Performance

Weakest

Over the last 90 days Plains All American has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Sunoco LP

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Sunoco LP are ranked lower than 4 (%) 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.

Pair Trading with Plains All and Sunoco LP

The main advantage of trading using opposite Plains All and Sunoco LP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Plains All 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 Plains All American 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.