Correlation Between Suncor Energy and Chevron Corp
Can any of the company-specific risk be diversified away by investing in both Suncor Energy and Chevron Corp 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 Chevron Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Suncor Energy and Chevron Corp, you can compare the effects of market volatilities on Suncor Energy and Chevron Corp 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 Chevron Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Suncor Energy and Chevron Corp.
Diversification Opportunities for Suncor Energy and Chevron Corp
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Suncor and Chevron is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Suncor Energy and Chevron Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chevron 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 Chevron Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chevron Corp has no effect on the direction of Suncor Energy i.e., Suncor Energy and Chevron Corp go up and down completely randomly.
Pair Corralation between Suncor Energy and Chevron Corp
Allowing for the 90-day total investment horizon Suncor Energy is expected to generate 1.15 times more return on investment than Chevron Corp. However, Suncor Energy is 1.15 times more volatile than Chevron Corp. It trades about 0.07 of its potential returns per unit of risk. Chevron Corp is currently generating about -0.04 per unit of risk. If you would invest 3,721 in Suncor Energy on March 17, 2025 and sell it today you would earn a total of 375.00 from holding Suncor Energy or generate 10.08% 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. Chevron Corp
Performance |
| Timeline |
| Suncor Energy |
| Chevron Corp |
Suncor Energy and Chevron Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Suncor Energy and Chevron Corp
The main advantage of trading using opposite Suncor Energy and Chevron Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Suncor Energy position performs unexpectedly, Chevron Corp 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 Chevron Corp will offset losses from the drop in Chevron Corp'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 |
| Chevron Corp vs. BP PLC ADR | Chevron Corp vs. Shell PLC ADR | Chevron Corp vs. Petroleo Brasileiro Petrobras | Chevron Corp 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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