Correlation Between CVR Energy and World Kinect

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

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

Diversification Opportunities for CVR Energy and World Kinect

0.78

Correlation Coefficient

CVR Energy  World Kinect

Poor diversification

The 3 months correlation between CVR and World is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding CVR Energy and World Kinect in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on World Kinect 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 World Kinect. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of World Kinect has no effect on the direction of CVR Energy i.e., CVR Energy and World Kinect go up and down completely randomly.

Pair Corralation between CVR Energy and World Kinect

Considering the 90-day investment horizon CVR Energy is expected to generate 1.9 times more return on investment than World Kinect. However, CVR Energy is 1.9 times more volatile than World Kinect. It trades about 0.08 of its potential returns per unit of risk. World Kinect is currently generating about 0.02 per unit of risk. If you would invest  1,890  in CVR Energy on September 12, 2024 and sell it today you would earn a total of  55.00  from holding CVR Energy or generate 2.91% return on investment over 90 days.

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

CVR Energy  vs.  World Kinect

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 fairly strong basic indicators, CVR Energy is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

World Kinect

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in World Kinect are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound forward-looking signals, World Kinect is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with CVR Energy and World Kinect

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

The idea behind CVR Energy and World Kinect 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.