Correlation Between Teekay and Sunoco LP

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

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

Diversification Opportunities for Teekay and Sunoco LP

0.04

Correlation Coefficient

Teekay  Sunoco LP

Significant diversification

The 3 months correlation between Teekay and Sunoco is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Teekay and Sunoco LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunoco LP and Teekay 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 Teekay 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 Teekay i.e., Teekay and Sunoco LP go up and down completely randomly.

Pair Corralation between Teekay and Sunoco LP

Allowing for the 90-day total investment horizon Teekay is expected to generate 1.56 times more return on investment than Sunoco LP. However, Teekay is 1.56 times more volatile than Sunoco LP. It trades about 0.37 of its potential returns per unit of risk. Sunoco LP is currently generating about 0.22 per unit of risk. If you would invest  810.00  in Teekay on August 3, 2025 and sell it today you would earn a total of  152.00  from holding Teekay or generate 18.77% return on investment over 90 days.

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

Teekay  vs.  Sunoco LP

Teekay

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Teekay are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward-looking signals, Teekay disclosed solid returns over the last few months and may actually be approaching a breakup point.

Sunoco LP

Risk-Adjusted Performance

Weakest

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 Teekay and Sunoco LP

The main advantage of trading using opposite Teekay and Sunoco LP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teekay 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 Teekay 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.