Correlation Between Crown LNG and Cenovus Energy

Can any of the company-specific risk be diversified away by investing in both Crown LNG 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 Crown LNG and Cenovus Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Crown LNG Holdings and Cenovus Energy, you can compare the effects of market volatilities on Crown LNG 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 Crown LNG with a short position of Cenovus Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crown LNG and Cenovus Energy.

Diversification Opportunities for Crown LNG and Cenovus Energy

-0.33

Correlation Coefficient

Crown LNG  Cenovus Energy

Very good diversification

The 3 months correlation between Crown and Cenovus is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Crown LNG Holdings and Cenovus Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cenovus Energy and Crown LNG 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 Crown LNG Holdings 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 Crown LNG i.e., Crown LNG and Cenovus Energy go up and down completely randomly.

Pair Corralation between Crown LNG and Cenovus Energy

Given the investment horizon of 90 days Crown LNG Holdings is expected to generate 4.17 times more return on investment than Cenovus Energy. However, Crown LNG is 4.17 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 -0.1 per unit of risk. If you would invest  37.00  in Crown LNG Holdings on September 1, 2024 and sell it today you would lose (6.00) from holding Crown LNG Holdings or give up 16.22% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Crown LNG Holdings  vs.  Cenovus Energy

Crown LNG Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Crown LNG Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental drivers, Crown LNG is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Cenovus Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cenovus Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Crown LNG and Cenovus Energy

The main advantage of trading using opposite Crown LNG and Cenovus Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crown LNG 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.

The idea behind Crown LNG Holdings and Cenovus Energy 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.

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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..