Correlation Between CVR Energy and Eneos Holdings

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

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

Diversification Opportunities for CVR Energy and Eneos Holdings

0.53

Correlation Coefficient

CVR Energy  Eneos Holdings

Very weak diversification

The 3 months correlation between CVR and Eneos is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding CVR Energy and Eneos Holdings ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eneos Holdings ADR 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 Eneos Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eneos Holdings ADR has no effect on the direction of CVR Energy i.e., CVR Energy and Eneos Holdings go up and down completely randomly.

Pair Corralation between CVR Energy and Eneos Holdings

Considering the 90-day investment horizon CVR Energy is expected to under-perform the Eneos Holdings. But the stock apears to be less risky and, when comparing its historical volatility, CVR Energy is 1.6 times less risky than Eneos Holdings. The stock trades about -0.05 of its potential returns per unit of risk. The Eneos Holdings ADR is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,047  in Eneos Holdings ADR on September 16, 2024 and sell it today you would lose (59.00) from holding Eneos Holdings ADR or give up 5.64% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

CVR Energy  vs.  Eneos Holdings ADR

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.

Eneos Holdings ADR

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Eneos Holdings ADR are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating essential indicators, Eneos Holdings may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with CVR Energy and Eneos Holdings

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

The idea behind CVR Energy and Eneos Holdings ADR 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.