Correlation Between Cenovus Energy and Imperial Oil

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Cenovus Energy and Imperial Oil 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 Imperial Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cenovus Energy and Imperial Oil, you can compare the effects of market volatilities on Cenovus Energy and Imperial Oil 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 Imperial Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cenovus Energy and Imperial Oil.

Diversification Opportunities for Cenovus Energy and Imperial Oil

0.94
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Cenovus and Imperial is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Cenovus Energy and Imperial Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Imperial Oil 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 Imperial Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Imperial Oil has no effect on the direction of Cenovus Energy i.e., Cenovus Energy and Imperial Oil go up and down completely randomly.

Pair Corralation between Cenovus Energy and Imperial Oil

Considering the 90-day investment horizon Cenovus Energy is expected to generate 1.32 times less return on investment than Imperial Oil. In addition to that, Cenovus Energy is 1.23 times more volatile than Imperial Oil. It trades about 0.03 of its total potential returns per unit of risk. Imperial Oil is currently generating about 0.04 per unit of volatility. If you would invest  4,893  in Imperial Oil on December 29, 2023 and sell it today you would earn a total of  1,972  from holding Imperial Oil or generate 40.3% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Cenovus Energy  vs.  Imperial Oil

 Performance 
       Timeline  
Cenovus Energy 

Risk-Adjusted Performance

14 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Cenovus Energy are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Cenovus Energy exhibited solid returns over the last few months and may actually be approaching a breakup point.
Imperial Oil 

Risk-Adjusted Performance

16 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Imperial Oil are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent primary indicators, Imperial Oil displayed solid returns over the last few months and may actually be approaching a breakup point.

Cenovus Energy and Imperial Oil Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Cenovus Energy and Imperial Oil

The main advantage of trading using opposite Cenovus Energy and Imperial Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cenovus Energy position performs unexpectedly, Imperial Oil 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 Imperial Oil will offset losses from the drop in Imperial Oil's long position.
The idea behind Cenovus Energy and Imperial Oil pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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.

Other Complementary Tools

ETF Categories
List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments
Fundamentals Comparison
Compare fundamentals across multiple equities to find investing opportunities
AI Investment Finder
Use AI to screen and filter profitable investment opportunities
AI Portfolio Architect
Use AI to generate optimal portfolios and find profitable investment opportunities
Premium Stories
Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope
Sectors
List of equity sectors categorizing publicly traded companies based on their primary business activities
Fundamental Analysis
View fundamental data based on most recent published financial statements
Commodity Directory
Find actively traded commodities issued by global exchanges
Money Flow Index
Determine momentum by analyzing Money Flow Index and other technical indicators
Balance Of Power
Check stock momentum by analyzing Balance Of Power indicator and other technical ratios
Cryptocurrency Center
Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency