Correlation Between Chevron Corp and Suncor Energy
Can any of the company-specific risk be diversified away by investing in both Chevron Corp 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 Chevron Corp and Suncor Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chevron Corp and Suncor Energy, you can compare the effects of market volatilities on Chevron Corp 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 Chevron Corp with a short position of Suncor Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chevron Corp and Suncor Energy.
Diversification Opportunities for Chevron Corp and Suncor Energy
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chevron and Suncor is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Chevron Corp and Suncor Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suncor Energy and Chevron Corp 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 Chevron Corp 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 Chevron Corp i.e., Chevron Corp and Suncor Energy go up and down completely randomly.
Pair Corralation between Chevron Corp and Suncor Energy
Considering the 90-day investment horizon Chevron Corp is expected to generate 1.06 times less return on investment than Suncor Energy. But when comparing it to its historical volatility, Chevron Corp is 1.34 times less risky than Suncor Energy. It trades about 0.03 of its potential returns per unit of risk. Suncor Energy is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 3,983 in Suncor Energy on August 24, 2024 and sell it today you would earn a total of 130.00 from holding Suncor Energy or generate 3.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chevron Corp vs. Suncor Energy
Performance |
| Timeline |
| Chevron Corp |
| Suncor Energy |
Chevron Corp and Suncor Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chevron Corp and Suncor Energy
The main advantage of trading using opposite Chevron Corp and Suncor Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chevron Corp 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.| Chevron Corp vs. Exxon Mobil Corp | Chevron Corp vs. Small Cap Core | Chevron Corp vs. Freedom Holding Corp | Chevron Corp vs. Gfl Environmental Holdings |
| Suncor Energy vs. Chevron Corp | Suncor Energy vs. Small Cap Core | Suncor Energy vs. Freedom Holding Corp | Suncor Energy vs. Gfl Environmental Holdings |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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