Correlation Between Stepstone and Suncor Energy
Can any of the company-specific risk be diversified away by investing in both Stepstone 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 Stepstone and Suncor Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stepstone Group and Suncor Energy, you can compare the effects of market volatilities on Stepstone 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 Stepstone with a short position of Suncor Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stepstone and Suncor Energy.
Diversification Opportunities for Stepstone and Suncor Energy
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Stepstone and Suncor is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Stepstone Group and Suncor Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suncor Energy and Stepstone 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 Stepstone Group 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 Stepstone i.e., Stepstone and Suncor Energy go up and down completely randomly.
Pair Corralation between Stepstone and Suncor Energy
Given the investment horizon of 90 days Stepstone Group is expected to generate 1.34 times more return on investment than Suncor Energy. However, Stepstone is 1.34 times more volatile than Suncor Energy. It trades about 0.16 of its potential returns per unit of risk. Suncor Energy is currently generating about 0.01 per unit of risk. If you would invest 5,379 in Stepstone Group on September 2, 2024 and sell it today you would earn a total of 1,210 from holding Stepstone Group or generate 22.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stepstone Group vs. Suncor Energy
Performance |
| Timeline |
| Stepstone Group |
| Suncor Energy |
Stepstone and Suncor Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stepstone and Suncor Energy
The main advantage of trading using opposite Stepstone and Suncor Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stepstone 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.| Stepstone vs. Munivest Fund | Stepstone vs. Blackrock Muniyield Quality | Stepstone vs. Federated Investors B | Stepstone vs. Federated Premier Municipal |
| Suncor Energy vs. Shell PLC ADR | Suncor Energy vs. Equinor ASA ADR | Suncor Energy vs. Petrleo Brasileiro SA |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
Other Complementary Tools
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance |