Correlation Between Cenovus Energy and Whitecap Resources
Can any of the company-specific risk be diversified away by investing in both Cenovus Energy and Whitecap Resources 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 Whitecap Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cenovus Energy and Whitecap Resources, you can compare the effects of market volatilities on Cenovus Energy and Whitecap Resources 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 Whitecap Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cenovus Energy and Whitecap Resources.
Diversification Opportunities for Cenovus Energy and Whitecap Resources
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Cenovus and Whitecap is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Cenovus Energy and Whitecap Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whitecap Resources 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 Whitecap Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Whitecap Resources has no effect on the direction of Cenovus Energy i.e., Cenovus Energy and Whitecap Resources go up and down completely randomly.
Pair Corralation between Cenovus Energy and Whitecap Resources
Assuming the 90 days trading horizon Cenovus Energy is expected to generate 1.22 times more return on investment than Whitecap Resources. However, Cenovus Energy is 1.22 times more volatile than Whitecap Resources. It trades about -0.1 of its potential returns per unit of risk. Whitecap Resources is currently generating about -0.22 per unit of risk. If you would invest 2,203 in Cenovus Energy on November 9, 2024 and sell it today you would lose (95.00) from holding Cenovus Energy or give up 4.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cenovus Energy vs. Whitecap Resources
Performance |
| Timeline |
| Cenovus Energy |
| Whitecap Resources |
Cenovus Energy and Whitecap Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cenovus Energy and Whitecap Resources
The main advantage of trading using opposite Cenovus Energy and Whitecap Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cenovus Energy position performs unexpectedly, Whitecap Resources 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 Whitecap Resources will offset losses from the drop in Whitecap Resources' 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 |
| Whitecap Resources vs. ARC Resources | Whitecap Resources vs. Tourmaline Oil Corp | Whitecap Resources vs. MEG Energy Corp | Whitecap Resources vs. Baytex Energy 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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