Correlation Between CVR Energy and AW Revenue

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

By analyzing existing cross correlation between CVR Energy and AW Revenue Royalties, you can compare the effects of market volatilities on CVR Energy and AW Revenue 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 AW Revenue. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVR Energy and AW Revenue.

Diversification Opportunities for CVR Energy and AW Revenue

-0.58

Correlation Coefficient

CVR Energy  AW Revenue

Excellent diversification

The 3 months correlation between CVR and AWRRF is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding CVR Energy and AW Revenue Royalties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AW Revenue Royalties 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 AW Revenue. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AW Revenue Royalties has no effect on the direction of CVR Energy i.e., CVR Energy and AW Revenue go up and down completely randomly.

Pair Corralation between CVR Energy and AW Revenue

Considering the 90-day investment horizon CVR Energy is expected to under-perform the AW Revenue. In addition to that, CVR Energy is 5.55 times more volatile than AW Revenue Royalties. It trades about -0.06 of its total potential returns per unit of risk. AW Revenue Royalties is currently generating about 0.28 per unit of volatility. If you would invest  2,495  in AW Revenue Royalties on September 3, 2024 and sell it today you would earn a total of  181.00  from holding AW Revenue Royalties or generate 7.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	50.0%
Values	Daily Returns

CVR Energy  vs.  AW Revenue Royalties

CVR Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CVR Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

AW Revenue Royalties

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days AW Revenue Royalties has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly weak basic indicators, AW Revenue reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CVR Energy and AW Revenue

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

The idea behind CVR Energy and AW Revenue Royalties 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.