Correlation Between Suncor Energy and Exxon
Can any of the company-specific risk be diversified away by investing in both Suncor Energy and Exxon 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 Exxon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Suncor Energy and Exxon Mobil Corp, you can compare the effects of market volatilities on Suncor Energy and Exxon 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 Exxon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Suncor Energy and Exxon.
Diversification Opportunities for Suncor Energy and Exxon
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Suncor and Exxon is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Suncor Energy and Exxon Mobil Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exxon Mobil 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 Exxon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exxon Mobil Corp has no effect on the direction of Suncor Energy i.e., Suncor Energy and Exxon go up and down completely randomly.
Pair Corralation between Suncor Energy and Exxon
Allowing for the 90-day total investment horizon Suncor Energy is expected to generate 1.37 times more return on investment than Exxon. However, Suncor Energy is 1.37 times more volatile than Exxon Mobil Corp. It trades about 0.48 of its potential returns per unit of risk. Exxon Mobil Corp is currently generating about 0.34 per unit of risk. If you would invest 3,461 in Suncor Energy on October 20, 2024 and sell it today you would earn a total of 442.00 from holding Suncor Energy or generate 12.77% 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. Exxon Mobil Corp
Performance |
| Timeline |
| Suncor Energy |
| Exxon Mobil Corp |
Suncor Energy and Exxon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Suncor Energy and Exxon
The main advantage of trading using opposite Suncor Energy and Exxon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Suncor Energy position performs unexpectedly, Exxon 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 Exxon will offset losses from the drop in Exxon'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 |
| Exxon vs. Petroleo Brasileiro Petrobras | Exxon vs. Equinor ASA ADR | Exxon vs. Eni SpA ADR | Exxon vs. Cenovus 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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