Correlation Between Cenovus Energy and Ovintiv
Can any of the company-specific risk be diversified away by investing in both Cenovus Energy 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 Cenovus Energy and Ovintiv into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cenovus Energy and Ovintiv, you can compare the effects of market volatilities on Cenovus Energy 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 Cenovus Energy with a short position of Ovintiv. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cenovus Energy and Ovintiv.
Diversification Opportunities for Cenovus Energy and Ovintiv
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Cenovus and Ovintiv is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Cenovus Energy and Ovintiv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ovintiv 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 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 Cenovus Energy i.e., Cenovus Energy and Ovintiv go up and down completely randomly.
Pair Corralation between Cenovus Energy and Ovintiv
Assuming the 90 days trading horizon Cenovus Energy is expected to under-perform the Ovintiv. But the stock apears to be less risky and, when comparing its historical volatility, Cenovus Energy is 1.1 times less risky than Ovintiv. The stock trades about -0.06 of its potential returns per unit of risk. The Ovintiv is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 6,452 in Ovintiv on September 3, 2024 and sell it today you would lose (71.00) from holding Ovintiv or give up 1.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cenovus Energy vs. Ovintiv
Performance |
| Timeline |
| Cenovus Energy |
| Ovintiv |
Cenovus Energy and Ovintiv Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cenovus Energy and Ovintiv
The main advantage of trading using opposite Cenovus Energy and Ovintiv positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cenovus Energy 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.| Cenovus Energy vs. Canadian Natural Resources | Cenovus Energy vs. Suncor Energy | Cenovus Energy vs. MEG Energy Corp | Cenovus Energy vs. Baytex Energy Corp |
| Ovintiv vs. Cenovus Energy | Ovintiv vs. Vermilion Energy | Ovintiv vs. MEG Energy Corp | Ovintiv vs. Tourmaline Oil Corp |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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