Suncor’s stock performance
In the previous part of this series, we looked into Suncor Energy’s (SU) segment-wise outlook for 3Q16. In this part, we’ll look at Suncor’s stock performance before its 3Q16 results.
Suncor’s (SU) stock fell 38% between October 2014 and January 20, 2016. Since then, the stock has recovered. This was due to the firming crude oil prices as a result of global supply reductions and outages impacting the supply glut. Suncor is now down by 12% since October 2014.
PetroChina (PTR) and Statoil (STO) fell 13% and 2%, respectively, since October 2014. ENI (E) fell sharply by 17% during the same period. The Vanguard High Dividend Yield ETF (VYM) has ~10% exposure to energy sector stocks.
Suncor’s stock correlation to crude oil and natural gas prices
Suncor’s (SU) stock shows a positive correlation to crude oil prices. The correlation coefficient of Suncor’s stock versus WTI for the 12-month period stands at 0.71. The correlation coefficient shows the relationship between two variables. A correlation coefficient value of zero to one shows a positive correlation, zero states no correlation, and negative one to zero shows an inverse correlation.
0.71 indicates a strong correlation. It means that on average, 71% of the movement in Suncor’s stock price can be explained by changes in WTI prices. However, the correlation to natural gas is feeble at 0.21.