Correlation Between Adams Resources and Cenovus Energy
Can any of the company-specific risk be diversified away by investing in both Adams Resources 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 Adams Resources and Cenovus Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adams Resources Energy and Cenovus Energy, you can compare the effects of market volatilities on Adams Resources 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 Adams Resources with a short position of Cenovus Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adams Resources and Cenovus Energy.
Diversification Opportunities for Adams Resources and Cenovus Energy
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Adams and Cenovus is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Adams Resources Energy and Cenovus Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cenovus Energy and Adams Resources 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 Adams Resources Energy 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 Adams Resources i.e., Adams Resources and Cenovus Energy go up and down completely randomly.
Pair Corralation between Adams Resources and Cenovus Energy
Allowing for the 90-day total investment horizon Adams Resources Energy is expected to under-perform the Cenovus Energy. In addition to that, Adams Resources is 1.43 times more volatile than Cenovus Energy. It trades about 0.0 of its total potential returns per unit of risk. Cenovus Energy is currently generating about 0.05 per unit of volatility. If you would invest 1,912 in Cenovus Energy on January 25, 2024 and sell it today you would earn a total of 198.50 from holding Cenovus Energy or generate 10.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Adams Resources Energy vs. Cenovus Energy
Performance |
| Timeline |
| Adams Resources Energy |
| Cenovus Energy |
Adams Resources and Cenovus Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adams Resources and Cenovus Energy
The main advantage of trading using opposite Adams Resources and Cenovus Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adams Resources 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.| Adams Resources vs. Delek Energy | Adams Resources vs. Sunoco LP | Adams Resources vs. CVR Energy | Adams Resources vs. Phillips 66 |
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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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