Correlation Between European Residential and Suncor Energy
Can any of the company-specific risk be diversified away by investing in both European Residential 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 European Residential and Suncor Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between European Residential Real and Suncor Energy, you can compare the effects of market volatilities on European Residential 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 European Residential with a short position of Suncor Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of European Residential and Suncor Energy.
Diversification Opportunities for European Residential and Suncor Energy
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between European and Suncor is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding European Residential Real and Suncor Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suncor Energy and European Residential 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 European Residential Real 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 European Residential i.e., European Residential and Suncor Energy go up and down completely randomly.
Pair Corralation between European Residential and Suncor Energy
Assuming the 90 days trading horizon European Residential Real is expected to under-perform the Suncor Energy. In addition to that, European Residential is 1.57 times more volatile than Suncor Energy. It trades about -0.01 of its total potential returns per unit of risk. Suncor Energy is currently generating about 0.04 per unit of volatility. If you would invest 4,439 in Suncor Energy on November 27, 2024 and sell it today you would earn a total of 1,140 from holding Suncor Energy or generate 25.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
European Residential Real vs. Suncor Energy
Performance |
| Timeline |
| European Residential Real |
| Suncor Energy |
European Residential and Suncor Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with European Residential and Suncor Energy
The main advantage of trading using opposite European Residential and Suncor Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if European Residential 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.| European Residential vs. BSR Real Estate | European Residential vs. Minto Apartment Real | European Residential vs. Nexus Real Estate | European Residential vs. Morguard North American |
| 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
Other Complementary Tools
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges |