Correlation Between Tesla and Cenovus Energy
Can any of the company-specific risk be diversified away by investing in both Tesla 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 Tesla and Cenovus Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tesla Inc CDR and Cenovus Energy, you can compare the effects of market volatilities on Tesla 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 Tesla with a short position of Cenovus Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tesla and Cenovus Energy.
Diversification Opportunities for Tesla and Cenovus Energy
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Tesla and Cenovus is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Tesla Inc CDR and Cenovus Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cenovus Energy and Tesla 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 Tesla Inc CDR 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 Tesla i.e., Tesla and Cenovus Energy go up and down completely randomly.
Pair Corralation between Tesla and Cenovus Energy
Assuming the 90 days trading horizon Tesla Inc CDR is expected to generate 2.33 times more return on investment than Cenovus Energy. However, Tesla is 2.33 times more volatile than Cenovus Energy. It trades about 0.0 of its potential returns per unit of risk. Cenovus Energy is currently generating about -0.02 per unit of risk. If you would invest 3,682 in Tesla Inc CDR on November 1, 2024 and sell it today you would lose (46.00) from holding Tesla Inc CDR or give up 1.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tesla Inc CDR vs. Cenovus Energy
Performance |
| Timeline |
| Tesla Inc CDR |
| Cenovus Energy |
Tesla and Cenovus Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tesla and Cenovus Energy
The main advantage of trading using opposite Tesla and Cenovus Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tesla 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.| Tesla vs. Monument Mining Limited | Tesla vs. Champion Iron | Tesla vs. High Liner Foods | Tesla vs. Maple Leaf Foods |
| 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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