Correlation Between Financial and Suncor Energy
Can any of the company-specific risk be diversified away by investing in both Financial 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 Financial and Suncor Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Financial 15 Split and Suncor Energy, you can compare the effects of market volatilities on Financial 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 Financial with a short position of Suncor Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Financial and Suncor Energy.
Diversification Opportunities for Financial and Suncor Energy
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Financial and Suncor is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Financial 15 Split and Suncor Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suncor Energy and Financial 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 Financial 15 Split 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 Financial i.e., Financial and Suncor Energy go up and down completely randomly.
Pair Corralation between Financial and Suncor Energy
Assuming the 90 days trading horizon Financial is expected to generate 3.06 times less return on investment than Suncor Energy. But when comparing it to its historical volatility, Financial 15 Split is 6.02 times less risky than Suncor Energy. It trades about 0.31 of its potential returns per unit of risk. Suncor Energy is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 4,992 in Suncor Energy on August 29, 2024 and sell it today you would earn a total of 571.00 from holding Suncor Energy or generate 11.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Financial 15 Split vs. Suncor Energy
Performance |
| Timeline |
| Financial 15 Split |
| Suncor Energy |
Financial and Suncor Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Financial and Suncor Energy
The main advantage of trading using opposite Financial and Suncor Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Financial 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.| Financial vs. North American Financial | Financial vs. Dividend 15 Split | Financial vs. Dividend Growth Split | Financial vs. Dividend 15 Split |
| 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
Other Complementary Tools
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets |