Correlation Between Cenovus Energy and National Fuel
Can any of the company-specific risk be diversified away by investing in both Cenovus Energy and National Fuel 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 National Fuel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cenovus Energy and National Fuel Gas, you can compare the effects of market volatilities on Cenovus Energy and National Fuel 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 National Fuel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cenovus Energy and National Fuel.
Diversification Opportunities for Cenovus Energy and National Fuel
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cenovus and National is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Cenovus Energy and National Fuel Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Fuel Gas 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 National Fuel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Fuel Gas has no effect on the direction of Cenovus Energy i.e., Cenovus Energy and National Fuel go up and down completely randomly.
Pair Corralation between Cenovus Energy and National Fuel
Considering the 90-day investment horizon Cenovus Energy is expected to under-perform the National Fuel. But the stock apears to be less risky and, when comparing its historical volatility, Cenovus Energy is 1.12 times less risky than National Fuel. The stock trades about -0.11 of its potential returns per unit of risk. The National Fuel Gas is currently generating about 0.52 of returns per unit of risk over similar time horizon. If you would invest 6,136 in National Fuel Gas on November 2, 2024 and sell it today you would earn a total of 896.00 from holding National Fuel Gas or generate 14.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cenovus Energy vs. National Fuel Gas
Performance |
| Timeline |
| Cenovus Energy |
| National Fuel Gas |
Cenovus Energy and National Fuel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cenovus Energy and National Fuel
The main advantage of trading using opposite Cenovus Energy and National Fuel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cenovus Energy position performs unexpectedly, National Fuel 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 National Fuel will offset losses from the drop in National Fuel's long position.| Cenovus Energy vs. Imperial Oil | Cenovus Energy vs. Exxon Mobil Corp | Cenovus Energy vs. Chevron Corp | Cenovus Energy vs. BP PLC ADR |
| National Fuel vs. YPF Sociedad Anonima | National Fuel vs. Eni SpA ADR | National Fuel vs. Ecopetrol SA ADR | National Fuel vs. TotalEnergies SE ADR |
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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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