Correlation Between CPG Old and Ovintiv

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

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

Diversification Opportunities for CPG Old and Ovintiv

0.16

Correlation Coefficient

CPG Old  Ovintiv

Average diversification

The 3 months correlation between CPG and Ovintiv is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding CPG Old and Ovintiv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ovintiv and CPG Old 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 CPG Old are associated (or correlated) with Ovintiv. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ovintiv has no effect on the direction of CPG Old i.e., CPG Old and Ovintiv go up and down completely randomly.

Pair Corralation between CPG Old and Ovintiv

If you would invest  3,876  in Ovintiv on October 25, 2024 and sell it today you would earn a total of  649.00  from holding Ovintiv or generate 16.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	5.56%
Values	Daily Returns

CPG Old  vs.  Ovintiv

CPG Old

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CPG Old has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, CPG Old is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Ovintiv

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ovintiv are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Ovintiv showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CPG Old and Ovintiv

The main advantage of trading using opposite CPG Old and Ovintiv positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CPG Old position performs unexpectedly, Ovintiv 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 Ovintiv will offset losses from the drop in Ovintiv's long position.

The idea behind CPG Old and Ovintiv 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.