Correlation Between CVR Energy and Compagnie
Can any of the company-specific risk be diversified away by investing in both CVR Energy and Compagnie 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 CVR Energy and Compagnie into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CVR Energy and Compagnie de Saint Gobain, you can compare the effects of market volatilities on CVR Energy and Compagnie 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 CVR Energy with a short position of Compagnie. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVR Energy and Compagnie.
Diversification Opportunities for CVR Energy and Compagnie
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between CVR and Compagnie is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding CVR Energy and Compagnie de Saint Gobain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie de Saint and CVR 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 CVR Energy are associated (or correlated) with Compagnie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie de Saint has no effect on the direction of CVR Energy i.e., CVR Energy and Compagnie go up and down completely randomly.
Pair Corralation between CVR Energy and Compagnie
Considering the 90-day investment horizon CVR Energy is expected to under-perform the Compagnie. In addition to that, CVR Energy is 1.23 times more volatile than Compagnie de Saint Gobain. It trades about -0.23 of its total potential returns per unit of risk. Compagnie de Saint Gobain is currently generating about 0.37 per unit of volatility. If you would invest 1,597 in Compagnie de Saint Gobain on March 1, 2024 and sell it today you would earn a total of 172.00 from holding Compagnie de Saint Gobain or generate 10.77% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
CVR Energy vs. Compagnie de Saint Gobain
Performance |
Timeline |
CVR Energy |
Compagnie de Saint |
CVR Energy and Compagnie Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with CVR Energy and Compagnie
The main advantage of trading using opposite CVR Energy and Compagnie positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVR Energy position performs unexpectedly, Compagnie 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 Compagnie will offset losses from the drop in Compagnie's long position.CVR Energy vs. Crossamerica Partners LP | CVR Energy vs. Valvoline | CVR Energy vs. Star Gas Partners | CVR Energy vs. Sinopec Shanghai Petrochemical |
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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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