Correlation Between Ovintiv and Journey Energy
Can any of the company-specific risk be diversified away by investing in both Ovintiv and Journey 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 Ovintiv and Journey Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ovintiv and Journey Energy, you can compare the effects of market volatilities on Ovintiv and Journey 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 Ovintiv with a short position of Journey Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ovintiv and Journey Energy.
Diversification Opportunities for Ovintiv and Journey Energy
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Ovintiv and Journey is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Ovintiv and Journey Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Journey Energy and Ovintiv 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 Ovintiv are associated (or correlated) with Journey Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Journey Energy has no effect on the direction of Ovintiv i.e., Ovintiv and Journey Energy go up and down completely randomly.
Pair Corralation between Ovintiv and Journey Energy
Assuming the 90 days trading horizon Ovintiv is expected to generate 0.51 times more return on investment than Journey Energy. However, Ovintiv is 1.94 times less risky than Journey Energy. It trades about 0.8 of its potential returns per unit of risk. Journey Energy is currently generating about 0.37 per unit of risk. If you would invest 5,483 in Ovintiv on October 22, 2024 and sell it today you would earn a total of 1,135 from holding Ovintiv or generate 20.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ovintiv vs. Journey Energy
Performance |
| Timeline |
| Ovintiv |
| Journey Energy |
Ovintiv and Journey Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ovintiv and Journey Energy
The main advantage of trading using opposite Ovintiv and Journey Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ovintiv position performs unexpectedly, Journey 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 Journey Energy will offset losses from the drop in Journey Energy's long position.| Ovintiv vs. Cenovus Energy | Ovintiv vs. Vermilion Energy | Ovintiv vs. MEG Energy Corp | Ovintiv vs. Tourmaline Oil Corp |
| Journey Energy vs. Gear Energy | Journey Energy vs. InPlay Oil Corp | Journey Energy vs. Headwater Exploration | Journey Energy vs. Cardinal Energy |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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