Correlation Between Cenovus and Stratasys

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

By analyzing existing cross correlation between Cenovus Energy 525 and Stratasys, you can compare the effects of market volatilities on Cenovus and Stratasys 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 Stratasys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cenovus and Stratasys.

Diversification Opportunities for Cenovus and Stratasys

-0.39

Correlation Coefficient

Cenovus  Stratasys

Very good diversification

The 3 months correlation between Cenovus and Stratasys is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Cenovus Energy 525 and Stratasys in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stratasys 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 525 are associated (or correlated) with Stratasys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stratasys has no effect on the direction of Cenovus i.e., Cenovus and Stratasys go up and down completely randomly.

Pair Corralation between Cenovus and Stratasys

Assuming the 90 days trading horizon Cenovus is expected to generate 14.28 times less return on investment than Stratasys. But when comparing it to its historical volatility, Cenovus Energy 525 is 3.25 times less risky than Stratasys. It trades about 0.01 of its potential returns per unit of risk. Stratasys is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  936.00  in Stratasys on December 25, 2024 and sell it today you would earn a total of  99.00  from holding Stratasys or generate 10.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	49.15%
Values	Daily Returns

Cenovus Energy 525  vs.  Stratasys

Cenovus Energy 525

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cenovus Energy 525 are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Cenovus is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Stratasys

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Stratasys are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Stratasys unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cenovus and Stratasys

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

The idea behind Cenovus Energy 525 and Stratasys 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.