Correlation Between Westaim Corp and Suncor Energy

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

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

Diversification Opportunities for Westaim Corp and Suncor Energy

-0.08

Correlation Coefficient

Westaim Corp  Suncor Energy

Good diversification

The 3 months correlation between Westaim and Suncor is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Westaim Corp and Suncor Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suncor Energy and Westaim Corp 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 Westaim Corp 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 Westaim Corp i.e., Westaim Corp and Suncor Energy go up and down completely randomly.

Pair Corralation between Westaim Corp and Suncor Energy

Assuming the 90 days horizon Westaim Corp is expected to generate 4.71 times less return on investment than Suncor Energy. In addition to that, Westaim Corp is 1.06 times more volatile than Suncor Energy. It trades about 0.02 of its total potential returns per unit of risk. Suncor Energy is currently generating about 0.1 per unit of volatility. If you would invest  5,033  in Suncor Energy on December 29, 2024 and sell it today you would earn a total of  459.00  from holding Suncor Energy or generate 9.12% return on investment over 90 days.

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

Westaim Corp  vs.  Suncor Energy

Westaim Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Westaim Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Westaim Corp is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Suncor Energy

Risk-Adjusted Performance

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 April 2025.

Pair Trading with Westaim Corp and Suncor Energy

The main advantage of trading using opposite Westaim Corp and Suncor Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westaim Corp 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 Westaim Corp 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.