Correlation Between Cenovus and Deluxe

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

By analyzing existing cross correlation between Cenovus Energy 675 and Deluxe, you can compare the effects of market volatilities on Cenovus and Deluxe 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 with a short position of Deluxe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cenovus and Deluxe.

Diversification Opportunities for Cenovus and Deluxe

-0.36

Correlation Coefficient

Cenovus  Deluxe

Very good diversification

The 3 months correlation between Cenovus and Deluxe is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Cenovus Energy 675 and Deluxe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deluxe and Cenovus 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 675 are associated (or correlated) with Deluxe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deluxe has no effect on the direction of Cenovus i.e., Cenovus and Deluxe go up and down completely randomly.

Pair Corralation between Cenovus and Deluxe

Assuming the 90 days trading horizon Cenovus is expected to generate 63.51 times less return on investment than Deluxe. But when comparing it to its historical volatility, Cenovus Energy 675 is 2.63 times less risky than Deluxe. It trades about 0.0 of its potential returns per unit of risk. Deluxe is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,892  in Deluxe on October 26, 2024 and sell it today you would earn a total of  317.00  from holding Deluxe or generate 16.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	61.67%
Values	Daily Returns

Cenovus Energy 675  vs.  Deluxe

Cenovus Energy 675

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cenovus Energy 675 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Cenovus is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Deluxe

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Deluxe are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating essential indicators, Deluxe showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cenovus and Deluxe

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

The idea behind Cenovus Energy 675 and Deluxe 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.