Correlation Between BMO Aggregate and Cenovus Energy
Can any of the company-specific risk be diversified away by investing in both BMO Aggregate and Cenovus Energy 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 BMO Aggregate and Cenovus Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BMO Aggregate Bond and Cenovus Energy, you can compare the effects of market volatilities on BMO Aggregate and Cenovus Energy 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 BMO Aggregate with a short position of Cenovus Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO Aggregate and Cenovus Energy.
Diversification Opportunities for BMO Aggregate and Cenovus Energy
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BMO and Cenovus is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding BMO Aggregate Bond and Cenovus Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cenovus Energy and BMO Aggregate 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 BMO Aggregate Bond are associated (or correlated) with Cenovus Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cenovus Energy has no effect on the direction of BMO Aggregate i.e., BMO Aggregate and Cenovus Energy go up and down completely randomly.
Pair Corralation between BMO Aggregate and Cenovus Energy
Assuming the 90 days trading horizon BMO Aggregate Bond is expected to under-perform the Cenovus Energy. But the etf apears to be less risky and, when comparing its historical volatility, BMO Aggregate Bond is 4.43 times less risky than Cenovus Energy. The etf trades about -0.4 of its potential returns per unit of risk. The Cenovus Energy is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 2,135 in Cenovus Energy on October 9, 2024 and sell it today you would earn a total of 80.00 from holding Cenovus Energy or generate 3.75% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 94.44% |
Values | Daily Returns |
BMO Aggregate Bond vs. Cenovus Energy
Performance |
Timeline |
BMO Aggregate Bond |
Cenovus Energy |
BMO Aggregate and Cenovus Energy Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with BMO Aggregate and Cenovus Energy
The main advantage of trading using opposite BMO Aggregate and Cenovus Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO Aggregate position performs unexpectedly, Cenovus Energy 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 Cenovus Energy will offset losses from the drop in Cenovus Energy's long position.BMO Aggregate vs. BMO Short Term Bond | BMO Aggregate vs. BMO Canadian Bank | BMO Aggregate vs. BMO Aggregate Bond | BMO Aggregate vs. BMO Balanced ETF |
Cenovus Energy vs. Canadian Natural Resources | Cenovus Energy vs. Suncor Energy | Cenovus Energy vs. MEG Energy Corp | Cenovus Energy vs. Baytex Energy Corp |
Check out your portfolio center.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 Commodity Directory module to find actively traded commodities issued by global exchanges.
Other Complementary Tools
Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
Content Syndication Quickly integrate customizable finance content to your own investment portal | |
Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance |