Correlation Between Ovintiv and CPG Old

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

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

Diversification Opportunities for Ovintiv and CPG Old

-0.16

Correlation Coefficient

Ovintiv  CPG Old

Good diversification

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

Pair Corralation between Ovintiv and CPG Old

Considering the 90-day investment horizon Ovintiv is expected to under-perform the CPG Old. In addition to that, Ovintiv is 17.04 times more volatile than CPG Old. It trades about -0.04 of its total potential returns per unit of risk. CPG Old is currently generating about -0.5 per unit of volatility. If you would invest  801.00  in CPG Old on October 10, 2024 and sell it today you would lose (2.00) from holding CPG Old or give up 0.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	3.23%
Values	Daily Returns

Ovintiv  vs.  CPG Old

Ovintiv

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ovintiv has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Ovintiv is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

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.

Pair Trading with Ovintiv and CPG Old

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

The idea behind Ovintiv and CPG Old 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.