Correlation Between SPDR Russell and Ovintiv

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Can any of the company-specific risk be diversified away by investing in both SPDR Russell and Ovintiv 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 SPDR Russell and Ovintiv into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR Russell 1000 and Ovintiv, you can compare the effects of market volatilities on SPDR Russell and Ovintiv 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 SPDR Russell with a short position of Ovintiv. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Russell and Ovintiv.

Diversification Opportunities for SPDR Russell and Ovintiv

0.92
  Correlation Coefficient

Almost no diversification

The 3 months correlation between SPDR and Ovintiv is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Russell 1000 and Ovintiv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ovintiv and SPDR Russell 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 SPDR Russell 1000 are associated (or correlated) with Ovintiv. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ovintiv has no effect on the direction of SPDR Russell i.e., SPDR Russell and Ovintiv go up and down completely randomly.

Pair Corralation between SPDR Russell and Ovintiv

Given the investment horizon of 90 days SPDR Russell is expected to generate 1.44 times less return on investment than Ovintiv. But when comparing it to its historical volatility, SPDR Russell 1000 is 2.64 times less risky than Ovintiv. It trades about 0.04 of its potential returns per unit of risk. Ovintiv is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  4,743  in Ovintiv on December 30, 2023 and sell it today you would earn a total of  447.00  from holding Ovintiv or generate 9.42% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

SPDR Russell 1000  vs.  Ovintiv

 Performance 
       Timeline  
SPDR Russell 1000 

Risk-Adjusted Performance

19 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in SPDR Russell 1000 are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal technical and fundamental indicators, SPDR Russell may actually be approaching a critical reversion point that can send shares even higher in April 2024.
Ovintiv 

Risk-Adjusted Performance

13 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Ovintiv are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Ovintiv showed solid returns over the last few months and may actually be approaching a breakup point.

SPDR Russell and Ovintiv Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with SPDR Russell and Ovintiv

The main advantage of trading using opposite SPDR Russell and Ovintiv positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Russell position performs unexpectedly, Ovintiv 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 Ovintiv will offset losses from the drop in Ovintiv's long position.
The idea behind SPDR Russell 1000 and Ovintiv 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.

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