Correlation Between Suncor Energy and Petroleo Brasileiro
Can any of the company-specific risk be diversified away by investing in both Suncor Energy and Petroleo Brasileiro 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 Petroleo Brasileiro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Suncor Energy and Petroleo Brasileiro Petrobras, you can compare the effects of market volatilities on Suncor Energy and Petroleo Brasileiro 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 Petroleo Brasileiro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Suncor Energy and Petroleo Brasileiro.
Diversification Opportunities for Suncor Energy and Petroleo Brasileiro
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Suncor and Petroleo is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Suncor Energy and Petroleo Brasileiro Petrobras in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petroleo Brasileiro 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 Petroleo Brasileiro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petroleo Brasileiro has no effect on the direction of Suncor Energy i.e., Suncor Energy and Petroleo Brasileiro go up and down completely randomly.
Pair Corralation between Suncor Energy and Petroleo Brasileiro
Allowing for the 90-day total investment horizon Suncor Energy is expected to generate 1.71 times less return on investment than Petroleo Brasileiro. But when comparing it to its historical volatility, Suncor Energy is 1.22 times less risky than Petroleo Brasileiro. It trades about 0.05 of its potential returns per unit of risk. Petroleo Brasileiro Petrobras is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 777.00 in Petroleo Brasileiro Petrobras on August 25, 2024 and sell it today you would earn a total of 713.00 from holding Petroleo Brasileiro Petrobras or generate 91.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Suncor Energy vs. Petroleo Brasileiro Petrobras
Performance |
| Timeline |
| Suncor Energy |
| Petroleo Brasileiro |
Suncor Energy and Petroleo Brasileiro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Suncor Energy and Petroleo Brasileiro
The main advantage of trading using opposite Suncor Energy and Petroleo Brasileiro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Suncor Energy position performs unexpectedly, Petroleo Brasileiro 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 Petroleo Brasileiro will offset losses from the drop in Petroleo Brasileiro's long position.| Suncor Energy vs. Imperial Oil | Suncor Energy vs. Ecopetrol SA ADR | Suncor Energy vs. Petroleo Brasileiro Petrobras | Suncor Energy vs. Equinor ASA ADR |
| Petroleo Brasileiro vs. Shell PLC ADR | Petroleo Brasileiro vs. Suncor Energy | Petroleo Brasileiro vs. TotalEnergies SE ADR | Petroleo Brasileiro vs. Equinor ASA ADR |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
Other Complementary Tools
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators |