Correlation Between Suncor Energy and CHEVRON CDR
Can any of the company-specific risk be diversified away by investing in both Suncor Energy and CHEVRON CDR 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 CHEVRON CDR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Suncor Energy and CHEVRON CDR, you can compare the effects of market volatilities on Suncor Energy and CHEVRON CDR 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 CHEVRON CDR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Suncor Energy and CHEVRON CDR.
Diversification Opportunities for Suncor Energy and CHEVRON CDR
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Suncor and CHEVRON is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Suncor Energy and CHEVRON CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHEVRON CDR 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 CHEVRON CDR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHEVRON CDR has no effect on the direction of Suncor Energy i.e., Suncor Energy and CHEVRON CDR go up and down completely randomly.
Pair Corralation between Suncor Energy and CHEVRON CDR
Assuming the 90 days horizon Suncor Energy is expected to generate 1.17 times more return on investment than CHEVRON CDR. However, Suncor Energy is 1.17 times more volatile than CHEVRON CDR. It trades about 0.05 of its potential returns per unit of risk. CHEVRON CDR is currently generating about 0.01 per unit of risk. If you would invest 3,798 in Suncor Energy on December 4, 2024 and sell it today you would earn a total of 1,455 from holding Suncor Energy or generate 38.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.18% |
| Values | Daily Returns |
Suncor Energy vs. CHEVRON CDR
Performance |
| Timeline |
| Suncor Energy |
| CHEVRON CDR |
Suncor Energy and CHEVRON CDR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Suncor Energy and CHEVRON CDR
The main advantage of trading using opposite Suncor Energy and CHEVRON CDR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Suncor Energy position performs unexpectedly, CHEVRON CDR 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 CHEVRON CDR will offset losses from the drop in CHEVRON CDR'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 |
| CHEVRON CDR vs. Atrium Mortgage Investment | CHEVRON CDR vs. NexPoint Hospitality Trust | CHEVRON CDR vs. Maple Leaf Foods | CHEVRON CDR vs. NorthWest Healthcare Properties |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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