Correlation Between Suncor Energy and Journey Energy
Can any of the company-specific risk be diversified away by investing in both Suncor Energy and Journey 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 Journey 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 Journey Energy, you can compare the effects of market volatilities on Suncor Energy and Journey 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 Journey Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Suncor Energy and Journey Energy.
Diversification Opportunities for Suncor Energy and Journey Energy
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Suncor and Journey is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Suncor Energy and Journey Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Journey 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 Journey Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Journey Energy has no effect on the direction of Suncor Energy i.e., Suncor Energy and Journey Energy go up and down completely randomly.
Pair Corralation between Suncor Energy and Journey Energy
Assuming the 90 days horizon Suncor Energy is expected to generate 0.56 times more return on investment than Journey Energy. However, Suncor Energy is 1.78 times less risky than Journey Energy. It trades about 0.18 of its potential returns per unit of risk. Journey Energy is currently generating about 0.0 per unit of risk. If you would invest 5,256 in Suncor Energy on September 1, 2024 and sell it today you would earn a total of 315.00 from holding Suncor Energy or generate 5.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Suncor Energy vs. Journey Energy
Performance |
| Timeline |
| Suncor Energy |
| Journey Energy |
Suncor Energy and Journey Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Suncor Energy and Journey Energy
The main advantage of trading using opposite Suncor Energy and Journey Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Suncor Energy position performs unexpectedly, Journey 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 Journey Energy will offset losses from the drop in Journey 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 |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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