Correlation Between Exxon and Cenovus Energy
Can any of the company-specific risk be diversified away by investing in both Exxon 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 Exxon and Cenovus Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Exxon Mobil Corp and Cenovus Energy, you can compare the effects of market volatilities on Exxon 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 Exxon with a short position of Cenovus Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exxon and Cenovus Energy.
Diversification Opportunities for Exxon and Cenovus Energy
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Exxon and Cenovus is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil Corp and Cenovus Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cenovus Energy and Exxon 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 Exxon Mobil 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 Exxon i.e., Exxon and Cenovus Energy go up and down completely randomly.
Pair Corralation between Exxon and Cenovus Energy
Considering the 90-day investment horizon Exxon Mobil Corp is expected to generate 0.69 times more return on investment than Cenovus Energy. However, Exxon Mobil Corp is 1.45 times less risky than Cenovus Energy. It trades about 0.04 of its potential returns per unit of risk. Cenovus Energy is currently generating about 0.0 per unit of risk. If you would invest 9,991 in Exxon Mobil Corp on August 25, 2024 and sell it today you would earn a total of 2,188 from holding Exxon Mobil Corp or generate 21.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Exxon Mobil Corp vs. Cenovus Energy
Performance |
| Timeline |
| Exxon Mobil Corp |
| Cenovus Energy |
Exxon and Cenovus Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exxon and Cenovus Energy
The main advantage of trading using opposite Exxon and Cenovus Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exxon 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.| Exxon vs. Shell PLC ADR | Exxon vs. Suncor Energy | Exxon vs. Cenovus Energy | Exxon vs. Petrleo Brasileiro SA |
| Cenovus Energy vs. Imperial Oil | Cenovus Energy vs. Exxon Mobil Corp | Cenovus Energy vs. Chevron Corp | Cenovus Energy vs. BP PLC 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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