Correlation Between Cenovus Energy and Eni SPA
Can any of the company-specific risk be diversified away by investing in both Cenovus Energy and Eni SPA 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 Cenovus Energy and Eni SPA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cenovus Energy and Eni SpA ADR, you can compare the effects of market volatilities on Cenovus Energy and Eni SPA 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 Cenovus Energy with a short position of Eni SPA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cenovus Energy and Eni SPA.
Diversification Opportunities for Cenovus Energy and Eni SPA
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cenovus and Eni is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Cenovus Energy and Eni SpA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eni SpA ADR and Cenovus Energy 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 Cenovus Energy are associated (or correlated) with Eni SPA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eni SpA ADR has no effect on the direction of Cenovus Energy i.e., Cenovus Energy and Eni SPA go up and down completely randomly.
Pair Corralation between Cenovus Energy and Eni SPA
Considering the 90-day investment horizon Cenovus Energy is expected to generate 1.1 times more return on investment than Eni SPA. However, Cenovus Energy is 1.1 times more volatile than Eni SpA ADR. It trades about 0.26 of its potential returns per unit of risk. Eni SpA ADR is currently generating about 0.18 per unit of risk. If you would invest 1,988 in Cenovus Energy on January 26, 2024 and sell it today you would earn a total of 135.00 from holding Cenovus Energy or generate 6.79% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Cenovus Energy vs. Eni SpA ADR
Performance |
Timeline |
Cenovus Energy |
Eni SpA ADR |
Cenovus Energy and Eni SPA Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Cenovus Energy and Eni SPA
The main advantage of trading using opposite Cenovus Energy and Eni SPA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cenovus Energy position performs unexpectedly, Eni SPA 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 Eni SPA will offset losses from the drop in Eni SPA's long position.Cenovus Energy vs. Imperial Oil | Cenovus Energy vs. Exxon Mobil Corp | Cenovus Energy vs. Chevron Corp | Cenovus Energy vs. BP PLC ADR |
Eni SPA vs. TotalEnergies SE ADR | Eni SPA vs. Ecopetrol SA ADR | Eni SPA vs. Shell PLC ADR | Eni SPA vs. Petroleo Brasileiro Petrobras |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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