Correlation Between Suncor Energy and Bombardier
Can any of the company-specific risk be diversified away by investing in both Suncor Energy and Bombardier 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 Suncor Energy and Bombardier into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Suncor Energy and Bombardier, you can compare the effects of market volatilities on Suncor Energy and Bombardier 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 Suncor Energy with a short position of Bombardier. Check out your portfolio center. Please also check ongoing floating volatility patterns of Suncor Energy and Bombardier.
Diversification Opportunities for Suncor Energy and Bombardier
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Suncor and Bombardier is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Suncor Energy and Bombardier in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bombardier and Suncor Energy 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 Suncor Energy are associated (or correlated) with Bombardier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bombardier has no effect on the direction of Suncor Energy i.e., Suncor Energy and Bombardier go up and down completely randomly.
Pair Corralation between Suncor Energy and Bombardier
Assuming the 90 days horizon Suncor Energy is expected to generate 0.44 times more return on investment than Bombardier. However, Suncor Energy is 2.28 times less risky than Bombardier. It trades about 0.12 of its potential returns per unit of risk. Bombardier is currently generating about -0.12 per unit of risk. If you would invest 5,343 in Suncor Energy on August 29, 2024 and sell it today you would earn a total of 208.00 from holding Suncor Energy or generate 3.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Suncor Energy vs. Bombardier
Performance |
| Timeline |
| Suncor Energy |
| Bombardier |
Suncor Energy and Bombardier Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Suncor Energy and Bombardier
The main advantage of trading using opposite Suncor Energy and Bombardier positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Suncor Energy position performs unexpectedly, Bombardier 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 Bombardier will offset losses from the drop in Bombardier's long position.| Suncor Energy vs. Enbridge | Suncor Energy vs. Canadian Natural Resources | Suncor Energy vs. Toronto Dominion Bank | Suncor Energy vs. Bank of Nova |
| Bombardier vs. BlackBerry | Bombardier vs. Air Canada | Bombardier vs. Suncor Energy | Bombardier vs. Manulife Financial Corp |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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