Correlation Between E Split and Cenovus Energy
Can any of the company-specific risk be diversified away by investing in both E Split and Cenovus Energy 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 E Split and Cenovus Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between E Split Corp and Cenovus Energy, you can compare the effects of market volatilities on E Split and Cenovus Energy 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 E Split with a short position of Cenovus Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of E Split and Cenovus Energy.
Diversification Opportunities for E Split and Cenovus Energy
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ENS-PA and Cenovus is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding E Split Corp and Cenovus Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cenovus Energy and E Split 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 E Split Corp are associated (or correlated) with Cenovus Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cenovus Energy has no effect on the direction of E Split i.e., E Split and Cenovus Energy go up and down completely randomly.
Pair Corralation between E Split and Cenovus Energy
Assuming the 90 days trading horizon E Split Corp is expected to generate 0.53 times more return on investment than Cenovus Energy. However, E Split Corp is 1.9 times less risky than Cenovus Energy. It trades about 0.26 of its potential returns per unit of risk. Cenovus Energy is currently generating about -0.07 per unit of risk. If you would invest 1,068 in E Split Corp on August 25, 2024 and sell it today you would earn a total of 49.00 from holding E Split Corp or generate 4.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
E Split Corp vs. Cenovus Energy
Performance |
| Timeline |
| E Split Corp |
| Cenovus Energy |
E Split and Cenovus Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with E Split and Cenovus Energy
The main advantage of trading using opposite E Split and Cenovus Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if E Split position performs unexpectedly, Cenovus Energy 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 Cenovus Energy will offset losses from the drop in Cenovus Energy's long position.The idea behind E Split Corp and Cenovus Energy 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.| Cenovus Energy vs. Canadian Natural Resources | Cenovus Energy vs. Suncor Energy | Cenovus Energy vs. MEG Energy Corp | Cenovus Energy 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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