Correlation Between Cenovus Energy and Pet Valu

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Can any of the company-specific risk be diversified away by investing in both Cenovus Energy and Pet Valu 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 Pet Valu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cenovus Energy and Pet Valu Holdings, you can compare the effects of market volatilities on Cenovus Energy and Pet Valu 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 Pet Valu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cenovus Energy and Pet Valu.

Diversification Opportunities for Cenovus Energy and Pet Valu

-0.36
  Correlation Coefficient

Very good diversification

The 3 months correlation between Cenovus and Pet is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Cenovus Energy and Pet Valu Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pet Valu Holdings 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 Pet Valu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pet Valu Holdings has no effect on the direction of Cenovus Energy i.e., Cenovus Energy and Pet Valu go up and down completely randomly.

Pair Corralation between Cenovus Energy and Pet Valu

Assuming the 90 days trading horizon Cenovus Energy is expected to generate 1.3 times more return on investment than Pet Valu. However, Cenovus Energy is 1.3 times more volatile than Pet Valu Holdings. It trades about 0.0 of its potential returns per unit of risk. Pet Valu Holdings is currently generating about -0.04 per unit of risk. If you would invest  2,364  in Cenovus Energy on September 3, 2024 and sell it today you would lose (146.00) from holding Cenovus Energy or give up 6.18% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Cenovus Energy  vs.  Pet Valu Holdings

 Performance 
       Timeline  
Cenovus Energy 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Cenovus Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.
Pet Valu Holdings 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Pet Valu Holdings are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Pet Valu displayed solid returns over the last few months and may actually be approaching a breakup point.

Cenovus Energy and Pet Valu Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Cenovus Energy and Pet Valu

The main advantage of trading using opposite Cenovus Energy and Pet Valu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cenovus Energy position performs unexpectedly, Pet Valu 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 Pet Valu will offset losses from the drop in Pet Valu's long position.
The idea behind Cenovus Energy and Pet Valu Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Transaction History module to view history of all your transactions and understand their impact on performance.

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