Correlation Between Premium Income and Cenovus Energy
Can any of the company-specific risk be diversified away by investing in both Premium Income 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 Premium Income and Cenovus Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Premium Income and Cenovus Energy, you can compare the effects of market volatilities on Premium Income 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 Premium Income with a short position of Cenovus Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Premium Income and Cenovus Energy.
Diversification Opportunities for Premium Income and Cenovus Energy
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Premium and Cenovus is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Premium Income and Cenovus Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cenovus Energy and Premium Income 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 Premium Income 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 Premium Income i.e., Premium Income and Cenovus Energy go up and down completely randomly.
Pair Corralation between Premium Income and Cenovus Energy
Assuming the 90 days trading horizon Premium Income is expected to under-perform the Cenovus Energy. In addition to that, Premium Income is 1.17 times more volatile than Cenovus Energy. It trades about -0.06 of its total potential returns per unit of risk. Cenovus Energy is currently generating about -0.07 per unit of volatility. If you would invest 2,317 in Cenovus Energy on August 25, 2024 and sell it today you would lose (55.00) from holding Cenovus Energy or give up 2.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Premium Income vs. Cenovus Energy
Performance |
| Timeline |
| Premium Income |
| Cenovus Energy |
Premium Income and Cenovus Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Premium Income and Cenovus Energy
The main advantage of trading using opposite Premium Income and Cenovus Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Premium Income 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.| Premium Income vs. NVIDIA CDR | Premium Income vs. Apple Inc CDR | Premium Income vs. Microsoft Corp CDR | Premium Income vs. Amazon CDR |
| 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
Other Complementary Tools
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format |