Correlation Between Suncor Energy and Shopify
Can any of the company-specific risk be diversified away by investing in both Suncor Energy and Shopify 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 Shopify into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Suncor Energy and Shopify, you can compare the effects of market volatilities on Suncor Energy and Shopify 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 Shopify. Check out your portfolio center. Please also check ongoing floating volatility patterns of Suncor Energy and Shopify.
Diversification Opportunities for Suncor Energy and Shopify
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Suncor and Shopify is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Suncor Energy and Shopify in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shopify 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 Shopify. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shopify has no effect on the direction of Suncor Energy i.e., Suncor Energy and Shopify go up and down completely randomly.
Pair Corralation between Suncor Energy and Shopify
Assuming the 90 days horizon Suncor Energy is expected to generate 3.73 times less return on investment than Shopify. But when comparing it to its historical volatility, Suncor Energy is 2.07 times less risky than Shopify. It trades about 0.05 of its potential returns per unit of risk. Shopify is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 5,738 in Shopify on November 1, 2024 and sell it today you would earn a total of 11,518 from holding Shopify or generate 200.73% 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. Shopify
Performance |
| Timeline |
| Suncor Energy |
| Shopify |
Suncor Energy and Shopify Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Suncor Energy and Shopify
The main advantage of trading using opposite Suncor Energy and Shopify positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Suncor Energy position performs unexpectedly, Shopify 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 Shopify will offset losses from the drop in Shopify'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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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