Correlation Between Clean Energy and Sunoco LP

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

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

Diversification Opportunities for Clean Energy and Sunoco LP

-0.53

Correlation Coefficient

Clean Energy  Sunoco LP

Excellent diversification

The 3 months correlation between Clean and Sunoco is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Clean Energy Fuels and Sunoco LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunoco LP and Clean Energy 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 Clean Energy Fuels 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 Clean Energy i.e., Clean Energy and Sunoco LP go up and down completely randomly.

Pair Corralation between Clean Energy and Sunoco LP

Given the investment horizon of 90 days Clean Energy Fuels is expected to generate 2.41 times more return on investment than Sunoco LP. However, Clean Energy is 2.41 times more volatile than Sunoco LP. It trades about 0.07 of its potential returns per unit of risk. Sunoco LP is currently generating about -0.02 per unit of risk. If you would invest  167.00  in Clean Energy Fuels on April 20, 2025 and sell it today you would earn a total of  36.00  from holding Clean Energy Fuels or generate 21.56% return on investment over 90 days.

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

Clean Energy Fuels  vs.  Sunoco LP

Clean Energy Fuels

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Clean Energy Fuels are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Clean Energy exhibited solid returns over the last few months and may actually be approaching a breakup point.

Sunoco LP

Risk-Adjusted Performance

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

Pair Trading with Clean Energy and Sunoco LP

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