Correlation Between ConocoPhillips and Ovintiv
Can any of the company-specific risk be diversified away by investing in both ConocoPhillips and Ovintiv 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 ConocoPhillips and Ovintiv into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ConocoPhillips and Ovintiv, you can compare the effects of market volatilities on ConocoPhillips and Ovintiv 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 ConocoPhillips with a short position of Ovintiv. Check out your portfolio center. Please also check ongoing floating volatility patterns of ConocoPhillips and Ovintiv.
Diversification Opportunities for ConocoPhillips and Ovintiv
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ConocoPhillips and Ovintiv is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding ConocoPhillips and Ovintiv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ovintiv and ConocoPhillips 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 ConocoPhillips are associated (or correlated) with Ovintiv. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ovintiv has no effect on the direction of ConocoPhillips i.e., ConocoPhillips and Ovintiv go up and down completely randomly.
Pair Corralation between ConocoPhillips and Ovintiv
Considering the 90-day investment horizon ConocoPhillips is expected to generate 2.75 times less return on investment than Ovintiv. But when comparing it to its historical volatility, ConocoPhillips is 1.05 times less risky than Ovintiv. It trades about 0.13 of its potential returns per unit of risk. Ovintiv is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 3,878 in Ovintiv on August 30, 2024 and sell it today you would earn a total of 671.00 from holding Ovintiv or generate 17.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ConocoPhillips vs. Ovintiv
Performance |
| Timeline |
| ConocoPhillips |
| Ovintiv |
ConocoPhillips and Ovintiv Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ConocoPhillips and Ovintiv
The main advantage of trading using opposite ConocoPhillips and Ovintiv positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ConocoPhillips position performs unexpectedly, Ovintiv 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 Ovintiv will offset losses from the drop in Ovintiv's long position.| ConocoPhillips vs. Diamondback Energy | ConocoPhillips vs. APA Corporation | ConocoPhillips vs. Hess Corporation | ConocoPhillips vs. Coterra Energy |
| Ovintiv vs. Baytex Energy Corp | Ovintiv vs. Obsidian Energy | Ovintiv vs. Canadian Natural Resources | Ovintiv vs. Vermilion Energy |
Check out your portfolio center.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 CEOs Directory module to screen CEOs from public companies around the world.
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