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.
The strength of the correlation is lower for ExxonMobil (XOM). The correlation of XOM versus WTI stands at 0.55. However, Statoil (STO) shows a higher correlation with WTI at 0.73.