7.53 +0.04 (+0.53%) Sell

Don't give up on CVE now, it gave a fairly good return

13 min read

CENOVUS ENERGY INC. (Foreign) delivered good returns on Tuesday. It grew by +0.53% to close at 7.53. On a day when the overall market breadth was 35%, it closed higher than 6% of the market. In comparison, the benchmark SP500 index closed today at -0.0004%.

[Themes containing CVE]

CVE showed a strong down trend over the last 3 months. During this period CVE lost -15.96% and saw a maximum drawdown of -33.62%. It has been unusually choppy during this period. Long term investors are better off avoiding investing in CVE till volatility reduces and a clear trend emerges.


CVE has been underperforming the SP500 index in recent time, after having outperformed till 7 Jun, 2016. Over the last 2 years 11 months and 7 days, CVE underperformed the SP500 index on 51% days.

During the last three months CVE was mostly loss making and delivered on average -0.23% per day. It's best return during this period (of +12.87%) was on Monday, 3 Dec, 2018. While it's worst loss in the same period (of -7.05%) was on Friday, 23 Nov, 2018. There was initially a bearish trend during this period which started on 4 Oct, 2018 and went on till 15 Oct, 2018. The trend delivered -20.49% losses to investors. This was followed by a bullish trend that started on 30 Oct, 2018 and ended on 1 Nov, 2018. This bullish trend delivered +5.59% to investors.

CVE had 5 profitable and 7 loss making months over the last year. During the last year, CVE underperformed SP500 index on monthly return basis. CVE was also a more risky investment than SP500 index as it's worst month in the last year, Feb 2018, returned -23.56% compared to -7.28% returned by SP500 index in Oct 2018. CVE had a shorter streak of profitable months than SP500 index. It only went up in 3 straight months during the last year.

There's more honor in investment management than in investment banking.
-- Charlie Munger

CVE is becoming more volatile overall. In comparison, the SP500 index is seeing a rise in volatility. During the last three months, there was a significant surge in CVE's volatility from 14 Sep, 2018 to 11 Dec, 2018. While there was a significant surge in the SP500 index's volatility from 13 Sep, 2018 to 29 Oct, 2018.

Advanced/professional short-term investors should note that CVE has significant negative skewness in it's return distribution. This indicates that CVE is very risky for short-term investment and can significantly underperform for long durations.

CVE has more chance of extreme outcomes than the SP500 index. Therefore, CVE must receive a lower allocation than SP500 in your portfolio. SP500 index usually has shorter drawdown period than CVE.

Based on your interest in CVE you may find it interesting to know that ZBRA is a small cap that has shown remarkable performance and deserves to be on every investors' watchlist.

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