Correlation Between Suncor Energy and Microsoft CDR

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

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

Diversification Opportunities for Suncor Energy and Microsoft CDR

-0.8

Correlation Coefficient

Suncor Energy  Microsoft CDR

Pay attention - limited upside

The 3 months correlation between Suncor and Microsoft is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Suncor Energy and Microsoft CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft CDR 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 Microsoft CDR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microsoft CDR has no effect on the direction of Suncor Energy i.e., Suncor Energy and Microsoft CDR go up and down completely randomly.

Pair Corralation between Suncor Energy and Microsoft CDR

Assuming the 90 days horizon Suncor Energy is expected to generate 1.02 times more return on investment than Microsoft CDR. However, Suncor Energy is 1.02 times more volatile than Microsoft CDR. It trades about 0.04 of its potential returns per unit of risk. Microsoft CDR is currently generating about -0.09 per unit of risk. If you would invest  5,861  in Suncor Energy on September 17, 2025 and sell it today you would earn a total of  146.00  from holding Suncor Energy or generate 2.49% return on investment over 90 days.

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

Suncor Energy  vs.  Microsoft CDR

Suncor Energy

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Suncor Energy are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Suncor Energy is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Microsoft CDR

Risk-Adjusted Performance

Weakest

Over the last 90 days Microsoft CDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Suncor Energy and Microsoft CDR

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

The idea behind Suncor Energy and Microsoft CDR 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.