Correlation Between Cenovus and Skyline

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

By analyzing existing cross correlation between Cenovus Energy 425 and Skyline, you can compare the effects of market volatilities on Cenovus and Skyline 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 Skyline. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cenovus and Skyline.

Diversification Opportunities for Cenovus and Skyline

0.05

Correlation Coefficient

Cenovus  Skyline

Significant diversification

The 3 months correlation between Cenovus and Skyline is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Cenovus Energy 425 and Skyline in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skyline 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 425 are associated (or correlated) with Skyline. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Skyline has no effect on the direction of Cenovus i.e., Cenovus and Skyline go up and down completely randomly.

Pair Corralation between Cenovus and Skyline

Assuming the 90 days trading horizon Cenovus Energy 425 is expected to under-perform the Skyline. But the bond apears to be less risky and, when comparing its historical volatility, Cenovus Energy 425 is 3.39 times less risky than Skyline. The bond trades about -0.19 of its potential returns per unit of risk. The Skyline is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  8,813  in Skyline on October 25, 2024 and sell it today you would earn a total of  155.00  from holding Skyline or generate 1.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	66.67%
Values	Daily Returns

Cenovus Energy 425  vs.  Skyline

Cenovus Energy 425

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cenovus Energy 425 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for Cenovus Energy 425 investors.

Skyline

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Skyline are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong forward-looking signals, Skyline is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Cenovus and Skyline

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

The idea behind Cenovus Energy 425 and Skyline 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.