Correlation Between Suncor Energy and TC Energy
Can any of the company-specific risk be diversified away by investing in both Suncor Energy and TC 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 TC 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 TC Energy Corp, you can compare the effects of market volatilities on Suncor Energy and TC 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 TC Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Suncor Energy and TC Energy.
Diversification Opportunities for Suncor Energy and TC Energy
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Suncor and TRP is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Suncor Energy and TC Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TC Energy Corp 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 TC Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TC Energy Corp has no effect on the direction of Suncor Energy i.e., Suncor Energy and TC Energy go up and down completely randomly.
Pair Corralation between Suncor Energy and TC Energy
Assuming the 90 days horizon Suncor Energy is expected to generate 1.28 times less return on investment than TC Energy. In addition to that, Suncor Energy is 1.17 times more volatile than TC Energy Corp. It trades about 0.13 of its total potential returns per unit of risk. TC Energy Corp is currently generating about 0.19 per unit of volatility. If you would invest 6,501 in TC Energy Corp on August 29, 2024 and sell it today you would earn a total of 353.00 from holding TC Energy Corp or generate 5.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Suncor Energy vs. TC Energy Corp
Performance |
| Timeline |
| Suncor Energy |
| TC Energy Corp |
Suncor Energy and TC Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Suncor Energy and TC Energy
The main advantage of trading using opposite Suncor Energy and TC Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Suncor Energy position performs unexpectedly, TC 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 TC Energy will offset losses from the drop in TC 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 |
| TC Energy vs. Keyera Corp | TC Energy vs. Parkland Fuel | TC Energy vs. Superior Plus Corp | TC Energy vs. Parex 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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