Correlation Between BP Prudhoe and Sunoco LP

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

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

Diversification Opportunities for BP Prudhoe and Sunoco LP

-0.76

Correlation Coefficient

BP Prudhoe  Sunoco LP

Pay attention - limited upside

The 3 months correlation between BPT and Sunoco is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding BP Prudhoe Bay and Sunoco LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunoco LP and BP Prudhoe 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 BP Prudhoe Bay 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 BP Prudhoe i.e., BP Prudhoe and Sunoco LP go up and down completely randomly.

Pair Corralation between BP Prudhoe and Sunoco LP

Considering the 90-day investment horizon BP Prudhoe Bay is expected to under-perform the Sunoco LP. In addition to that, BP Prudhoe is 6.16 times more volatile than Sunoco LP. It trades about -0.1 of its total potential returns per unit of risk. Sunoco LP is currently generating about 0.04 per unit of volatility. If you would invest  5,370  in Sunoco LP on May 3, 2025 and sell it today you would earn a total of  161.00  from holding Sunoco LP or generate 3.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	68.85%
Values	Daily Returns

BP Prudhoe Bay  vs.  Sunoco LP

BP Prudhoe Bay

Risk-Adjusted Performance

Very Weak

Over the last 90 days BP Prudhoe Bay has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in September 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Sunoco LP

Risk-Adjusted Performance

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 latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with BP Prudhoe and Sunoco LP

The main advantage of trading using opposite BP Prudhoe and Sunoco LP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BP Prudhoe 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 BP Prudhoe Bay 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.