Correlation Between Canadian Natural and Suncor Energy
Can any of the company-specific risk be diversified away by investing in both Canadian Natural and Suncor Energy 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 Canadian Natural and Suncor Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canadian Natural Resources and Suncor Energy, you can compare the effects of market volatilities on Canadian Natural and Suncor Energy 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 Canadian Natural with a short position of Suncor Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Natural and Suncor Energy.
Diversification Opportunities for Canadian Natural and Suncor Energy
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Canadian and Suncor is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Natural Resources and Suncor Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suncor Energy and Canadian Natural 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 Canadian Natural Resources are associated (or correlated) with Suncor Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suncor Energy has no effect on the direction of Canadian Natural i.e., Canadian Natural and Suncor Energy go up and down completely randomly.
Pair Corralation between Canadian Natural and Suncor Energy
Assuming the 90 days trading horizon Canadian Natural Resources is expected to under-perform the Suncor Energy. In addition to that, Canadian Natural is 1.18 times more volatile than Suncor Energy. It trades about -0.1 of its total potential returns per unit of risk. Suncor Energy is currently generating about 0.1 per unit of volatility. If you would invest 5,295 in Suncor Energy on November 7, 2024 and sell it today you would earn a total of 158.00 from holding Suncor Energy or generate 2.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Canadian Natural Resources vs. Suncor Energy
Performance |
| Timeline |
| Canadian Natural Res |
| Suncor Energy |
Canadian Natural and Suncor Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Natural and Suncor Energy
The main advantage of trading using opposite Canadian Natural and Suncor Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Natural position performs unexpectedly, Suncor Energy 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 Suncor Energy will offset losses from the drop in Suncor Energy's long position.| Canadian Natural vs. Suncor Energy | Canadian Natural vs. Cenovus Energy | Canadian Natural vs. TC Energy Corp | Canadian Natural vs. Enbridge |
| Suncor Energy vs. Enbridge | Suncor Energy vs. Canadian Natural Resources | Suncor Energy vs. Toronto Dominion Bank | Suncor Energy vs. Bank of Nova |
Check out your portfolio center.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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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