Correlation Between Cenovus Energy and National Fuel

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

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

Diversification Opportunities for Cenovus Energy and National Fuel

0.38

Correlation Coefficient

Cenovus Energy  National Fuel

Weak diversification

The 3 months correlation between Cenovus and National is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Cenovus Energy and National Fuel Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Fuel Gas and Cenovus Energy 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 are associated (or correlated) with National Fuel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Fuel Gas has no effect on the direction of Cenovus Energy i.e., Cenovus Energy and National Fuel go up and down completely randomly.

Pair Corralation between Cenovus Energy and National Fuel

Considering the 90-day investment horizon Cenovus Energy is expected to generate 1.02 times less return on investment than National Fuel. In addition to that, Cenovus Energy is 2.26 times more volatile than National Fuel Gas. It trades about 0.05 of its total potential returns per unit of risk. National Fuel Gas is currently generating about 0.11 per unit of volatility. If you would invest  7,381  in National Fuel Gas on March 8, 2025 and sell it today you would earn a total of  779.00  from holding National Fuel Gas or generate 10.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Cenovus Energy  vs.  National Fuel Gas

Cenovus Energy

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cenovus Energy are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Cenovus Energy may actually be approaching a critical reversion point that can send shares even higher in July 2025.

National Fuel Gas

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in National Fuel Gas are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, National Fuel may actually be approaching a critical reversion point that can send shares even higher in July 2025.

Pair Trading with Cenovus Energy and National Fuel

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

The idea behind Cenovus Energy and National Fuel Gas 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.

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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.