Correlation Between Cenovus and Toro

Can any of the company-specific risk be diversified away by investing in both Cenovus and Toro 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 Toro 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 Toro, you can compare the effects of market volatilities on Cenovus and Toro 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 Toro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cenovus and Toro.

Diversification Opportunities for Cenovus and Toro

0.2

Correlation Coefficient

Cenovus  Toro

Modest diversification

The 3 months correlation between Cenovus and Toro is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Cenovus Energy 525 and Toro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Toro 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 Toro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Toro has no effect on the direction of Cenovus i.e., Cenovus and Toro go up and down completely randomly.

Pair Corralation between Cenovus and Toro

Assuming the 90 days trading horizon Cenovus Energy 525 is expected to generate 0.5 times more return on investment than Toro. However, Cenovus Energy 525 is 2.01 times less risky than Toro. It trades about 0.01 of its potential returns per unit of risk. Toro is currently generating about -0.08 per unit of risk. If you would invest  9,562  in Cenovus Energy 525 on December 22, 2024 and sell it today you would earn a total of  27.00  from holding Cenovus Energy 525 or generate 0.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	47.54%
Values	Daily Returns

Cenovus Energy 525  vs.  Toro

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.

Toro

Risk-Adjusted Performance

Very Weak

Over the last 90 days Toro has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Cenovus and Toro

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

The idea behind Cenovus Energy 525 and Toro 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.