Correlation Between Suncor Energy and Hemisphere Energy
Can any of the company-specific risk be diversified away by investing in both Suncor Energy and Hemisphere 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 Suncor Energy and Hemisphere Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Suncor Energy and Hemisphere Energy, you can compare the effects of market volatilities on Suncor Energy and Hemisphere 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 Suncor Energy with a short position of Hemisphere Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Suncor Energy and Hemisphere Energy.
Diversification Opportunities for Suncor Energy and Hemisphere Energy
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Suncor and Hemisphere is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Suncor Energy and Hemisphere Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hemisphere Energy 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 Hemisphere Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hemisphere Energy has no effect on the direction of Suncor Energy i.e., Suncor Energy and Hemisphere Energy go up and down completely randomly.
Pair Corralation between Suncor Energy and Hemisphere Energy
Assuming the 90 days horizon Suncor Energy is expected to generate 1.66 times less return on investment than Hemisphere Energy. But when comparing it to its historical volatility, Suncor Energy is 1.1 times less risky than Hemisphere Energy. It trades about 0.05 of its potential returns per unit of risk. Hemisphere Energy is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 114.00 in Hemisphere Energy on September 1, 2024 and sell it today you would earn a total of 74.00 from holding Hemisphere Energy or generate 64.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Suncor Energy vs. Hemisphere Energy
Performance |
| Timeline |
| Suncor Energy |
| Hemisphere Energy |
Suncor Energy and Hemisphere Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Suncor Energy and Hemisphere Energy
The main advantage of trading using opposite Suncor Energy and Hemisphere Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Suncor Energy position performs unexpectedly, Hemisphere 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 Hemisphere Energy will offset losses from the drop in Hemisphere Energy'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 |
| Hemisphere Energy vs. InPlay Oil Corp | Hemisphere Energy vs. Pine Cliff Energy | Hemisphere Energy vs. Journey Energy | Hemisphere Energy vs. Yangarra Resources |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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