Correlation Between Cenovus Energy and FS Energy

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

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

Diversification Opportunities for Cenovus Energy and FS Energy

0.29

Correlation Coefficient

Cenovus Energy  FS Energy

Modest diversification

The 3 months correlation between Cenovus and FSEN is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Cenovus Energy and FS Energy and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FS Energy 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 FS Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FS Energy has no effect on the direction of Cenovus Energy i.e., Cenovus Energy and FS Energy go up and down completely randomly.

Pair Corralation between Cenovus Energy and FS Energy

Considering the 90-day investment horizon Cenovus Energy is expected to generate 0.45 times more return on investment than FS Energy. However, Cenovus Energy is 2.22 times less risky than FS Energy. It trades about 0.2 of its potential returns per unit of risk. FS Energy and is currently generating about 0.04 per unit of risk. If you would invest  1,154  in Cenovus Energy on May 5, 2025 and sell it today you would earn a total of  329.00  from holding Cenovus Energy or generate 28.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.92%
Values	Daily Returns

Cenovus Energy  vs.  FS Energy and

Cenovus Energy

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cenovus Energy are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Cenovus Energy exhibited solid returns over the last few months and may actually be approaching a breakup point.

FS Energy

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in FS Energy and are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very sluggish technical and fundamental indicators, FS Energy displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cenovus Energy and FS Energy

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

The idea behind Cenovus Energy and FS Energy and 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.