Correlation Between Apple and Suncor Energy

Can any of the company-specific risk be diversified away by investing in both Apple and Suncor 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 Apple and Suncor Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Apple Inc CDR and Suncor Energy, you can compare the effects of market volatilities on Apple and Suncor 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 Apple with a short position of Suncor Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Suncor Energy.

Diversification Opportunities for Apple and Suncor Energy

-0.53

Correlation Coefficient

Apple  Suncor Energy

Excellent diversification

The 3 months correlation between Apple and Suncor is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc CDR and Suncor Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suncor Energy and Apple 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 Apple Inc CDR are associated (or correlated) with Suncor Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suncor Energy has no effect on the direction of Apple i.e., Apple and Suncor Energy go up and down completely randomly.

Pair Corralation between Apple and Suncor Energy

Assuming the 90 days trading horizon Apple Inc CDR is expected to under-perform the Suncor Energy. In addition to that, Apple is 1.18 times more volatile than Suncor Energy. It trades about -0.34 of its total potential returns per unit of risk. Suncor Energy is currently generating about 0.55 per unit of volatility. If you would invest  5,037  in Suncor Energy on October 23, 2024 and sell it today you would earn a total of  678.00  from holding Suncor Energy or generate 13.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Apple Inc CDR  vs.  Suncor Energy

Apple Inc CDR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Apple Inc CDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Apple is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Suncor Energy

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Suncor Energy are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Suncor Energy may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Apple and Suncor Energy

The main advantage of trading using opposite Apple and Suncor Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, Suncor 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 Suncor Energy will offset losses from the drop in Suncor Energy's long position.

The idea behind Apple Inc CDR and Suncor Energy pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.