Correlation Between Equinor ASA and Suncor Energy
Can any of the company-specific risk be diversified away by investing in both Equinor ASA 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 Equinor ASA and Suncor Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Equinor ASA ADR and Suncor Energy, you can compare the effects of market volatilities on Equinor ASA 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 Equinor ASA with a short position of Suncor Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equinor ASA and Suncor Energy.
Diversification Opportunities for Equinor ASA and Suncor Energy
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Equinor and Suncor is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Equinor ASA ADR and Suncor Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suncor Energy and Equinor ASA 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 Equinor ASA ADR 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 Equinor ASA i.e., Equinor ASA and Suncor Energy go up and down completely randomly.
Pair Corralation between Equinor ASA and Suncor Energy
Given the investment horizon of 90 days Equinor ASA ADR is expected to under-perform the Suncor Energy. In addition to that, Equinor ASA is 1.11 times more volatile than Suncor Energy. It trades about -0.06 of its total potential returns per unit of risk. Suncor Energy is currently generating about 0.25 per unit of volatility. If you would invest 3,604 in Suncor Energy on November 2, 2024 and sell it today you would earn a total of 260.00 from holding Suncor Energy or generate 7.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Equinor ASA ADR vs. Suncor Energy
Performance |
| Timeline |
| Equinor ASA ADR |
| Suncor Energy |
Equinor ASA and Suncor Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Equinor ASA and Suncor Energy
The main advantage of trading using opposite Equinor ASA and Suncor Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equinor ASA 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.| Equinor ASA vs. Shell PLC ADR | Equinor ASA vs. BP PLC ADR | Equinor ASA vs. Eni SpA ADR | Equinor ASA vs. Galp Energa |
| Suncor Energy vs. Imperial Oil | Suncor Energy vs. Ecopetrol SA ADR | Suncor Energy vs. Petroleo Brasileiro Petrobras | Suncor Energy vs. Equinor ASA ADR |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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