Correlation Between Suncor Energy and Crown LNG
Can any of the company-specific risk be diversified away by investing in both Suncor Energy and Crown LNG 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 Crown LNG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Suncor Energy and Crown LNG Holdings, you can compare the effects of market volatilities on Suncor Energy and Crown LNG 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 Crown LNG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Suncor Energy and Crown LNG.
Diversification Opportunities for Suncor Energy and Crown LNG
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Suncor and Crown is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Suncor Energy and Crown LNG Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crown LNG Holdings 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 Crown LNG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crown LNG Holdings has no effect on the direction of Suncor Energy i.e., Suncor Energy and Crown LNG go up and down completely randomly.
Pair Corralation between Suncor Energy and Crown LNG
Allowing for the 90-day total investment horizon Suncor Energy is expected to generate 44.0 times less return on investment than Crown LNG. But when comparing it to its historical volatility, Suncor Energy is 20.67 times less risky than Crown LNG. It trades about 0.05 of its potential returns per unit of risk. Crown LNG Holdings is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 3.75 in Crown LNG Holdings on August 24, 2024 and sell it today you would lose (0.70) from holding Crown LNG Holdings or give up 18.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 19.76% |
| Values | Daily Returns |
Suncor Energy vs. Crown LNG Holdings
Performance |
| Timeline |
| Suncor Energy |
| Crown LNG Holdings |
Suncor Energy and Crown LNG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Suncor Energy and Crown LNG
The main advantage of trading using opposite Suncor Energy and Crown LNG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Suncor Energy position performs unexpectedly, Crown LNG 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 Crown LNG will offset losses from the drop in Crown LNG's long position.| Suncor Energy vs. Eshallgo Class A | Suncor Energy vs. Amtech Systems | Suncor Energy vs. Gold Fields Ltd | Suncor Energy vs. Aegean Airlines SA |
| Crown LNG vs. Eni SpA ADR | Crown LNG vs. BP PLC ADR | Crown LNG vs. Ecopetrol SA ADR | Crown LNG vs. Suncor Energy |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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