Correlation Between CVR Energy and Booking Holdings

Can any of the company-specific risk be diversified away by investing in both CVR Energy and Booking 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 Booking 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 Booking Holdings, you can compare the effects of market volatilities on CVR Energy and Booking 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 Booking Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVR Energy and Booking Holdings.

Diversification Opportunities for CVR Energy and Booking Holdings

-0.46

Correlation Coefficient

CVR Energy  Booking Holdings

Very good diversification

The 3 months correlation between CVR and Booking is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding CVR Energy and Booking Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Booking Holdings 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 Booking Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Booking Holdings has no effect on the direction of CVR Energy i.e., CVR Energy and Booking Holdings go up and down completely randomly.

Pair Corralation between CVR Energy and Booking Holdings

Assuming the 90 days trading horizon CVR Energy is expected to generate 1.92 times more return on investment than Booking Holdings. However, CVR Energy is 1.92 times more volatile than Booking Holdings. It trades about -0.15 of its potential returns per unit of risk. Booking Holdings is currently generating about -0.36 per unit of risk. If you would invest  1,973  in CVR Energy on October 11, 2024 and sell it today you would lose (124.00) from holding CVR Energy or give up 6.28% of portfolio value over 90 days.

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

CVR Energy  vs.  Booking Holdings

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 February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Booking Holdings

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Booking Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Booking Holdings unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CVR Energy and Booking Holdings

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

The idea behind CVR Energy and Booking Holdings 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .