Correlation Between Suncor Energy and Questerre Energy
Can any of the company-specific risk be diversified away by investing in both Suncor Energy and Questerre 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 Questerre 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 Questerre Energy, you can compare the effects of market volatilities on Suncor Energy and Questerre 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 Questerre Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Suncor Energy and Questerre Energy.
Diversification Opportunities for Suncor Energy and Questerre Energy
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Suncor and Questerre is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Suncor Energy and Questerre Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Questerre 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 Questerre Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Questerre Energy has no effect on the direction of Suncor Energy i.e., Suncor Energy and Questerre Energy go up and down completely randomly.
Pair Corralation between Suncor Energy and Questerre Energy
Assuming the 90 days horizon Suncor Energy is expected to generate 0.3 times more return on investment than Questerre Energy. However, Suncor Energy is 3.34 times less risky than Questerre Energy. It trades about 0.04 of its potential returns per unit of risk. Questerre Energy is currently generating about 0.01 per unit of risk. If you would invest 5,217 in Suncor Energy on September 1, 2024 and sell it today you would earn a total of 354.00 from holding Suncor Energy or generate 6.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Suncor Energy vs. Questerre Energy
Performance |
| Timeline |
| Suncor Energy |
| Questerre Energy |
Suncor Energy and Questerre Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Suncor Energy and Questerre Energy
The main advantage of trading using opposite Suncor Energy and Questerre Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Suncor Energy position performs unexpectedly, Questerre 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 Questerre Energy will offset losses from the drop in Questerre 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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