Correlation Between Team Internet and CVR Energy

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

By analyzing existing cross correlation between Team Internet Group and CVR Energy, you can compare the effects of market volatilities on Team Internet and CVR Energy 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 Team Internet with a short position of CVR Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Team Internet and CVR Energy.

Diversification Opportunities for Team Internet and CVR Energy

0.54

Correlation Coefficient

Team Internet  CVR Energy

Very weak diversification

The 3 months correlation between Team and CVR is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Team Internet Group and CVR Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVR Energy and Team Internet 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 Team Internet Group are associated (or correlated) with CVR Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVR Energy has no effect on the direction of Team Internet i.e., Team Internet and CVR Energy go up and down completely randomly.

Pair Corralation between Team Internet and CVR Energy

Assuming the 90 days trading horizon Team Internet Group is expected to under-perform the CVR Energy. But the stock apears to be less risky and, when comparing its historical volatility, Team Internet Group is 1.08 times less risky than CVR Energy. The stock trades about -0.17 of its potential returns per unit of risk. The CVR Energy is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  2,477  in CVR Energy on August 31, 2024 and sell it today you would lose (531.00) from holding CVR Energy or give up 21.44% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Team Internet Group  vs.  CVR Energy

Team Internet Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Team Internet Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in December 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

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. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Team Internet and CVR Energy

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

The idea behind Team Internet Group and CVR Energy 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.