Correlation Between Cenovus Energy and Enbridge
Can any of the company-specific risk be diversified away by investing in both Cenovus Energy and Enbridge 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 Cenovus Energy and Enbridge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cenovus Energy and Enbridge, you can compare the effects of market volatilities on Cenovus Energy and Enbridge 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 Cenovus Energy with a short position of Enbridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cenovus Energy and Enbridge.
Diversification Opportunities for Cenovus Energy and Enbridge
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Cenovus and Enbridge is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Cenovus Energy and Enbridge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enbridge and Cenovus 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 Cenovus Energy are associated (or correlated) with Enbridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enbridge has no effect on the direction of Cenovus Energy i.e., Cenovus Energy and Enbridge go up and down completely randomly.
Pair Corralation between Cenovus Energy and Enbridge
Assuming the 90 days trading horizon Cenovus Energy is expected to under-perform the Enbridge. In addition to that, Cenovus Energy is 1.65 times more volatile than Enbridge. It trades about -0.18 of its total potential returns per unit of risk. Enbridge is currently generating about 0.36 per unit of volatility. If you would invest 5,594 in Enbridge on August 29, 2024 and sell it today you would earn a total of 412.00 from holding Enbridge or generate 7.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cenovus Energy vs. Enbridge
Performance |
| Timeline |
| Cenovus Energy |
| Enbridge |
Cenovus Energy and Enbridge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cenovus Energy and Enbridge
The main advantage of trading using opposite Cenovus Energy and Enbridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cenovus Energy position performs unexpectedly, Enbridge 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 Enbridge will offset losses from the drop in Enbridge's long position.| Cenovus Energy vs. Enbridge Pref 5 | Cenovus Energy vs. Enbridge Pref 11 | Cenovus Energy vs. Enbridge Pref L | Cenovus Energy vs. E Split Corp |
| Enbridge vs. Suncor Energy | Enbridge vs. Toronto Dominion Bank | Enbridge vs. Bank of Nova | Enbridge vs. BCE Inc |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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