Correlation Between CVR Energy and Bank of Utica

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

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

Diversification Opportunities for CVR Energy and Bank of Utica

0.3

Correlation Coefficient

CVR Energy  Bank of Utica

Weak diversification

The 3 months correlation between CVR and Bank is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding CVR Energy and Bank of Utica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Utica 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 Bank of Utica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Utica has no effect on the direction of CVR Energy i.e., CVR Energy and Bank of Utica go up and down completely randomly.

Pair Corralation between CVR Energy and Bank of Utica

Considering the 90-day investment horizon CVR Energy is expected to generate 1.66 times more return on investment than Bank of Utica. However, CVR Energy is 1.66 times more volatile than Bank of Utica. It trades about 0.07 of its potential returns per unit of risk. Bank of Utica is currently generating about -0.1 per unit of risk. If you would invest  1,829  in CVR Energy on December 26, 2024 and sell it today you would earn a total of  195.00  from holding CVR Energy or generate 10.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	83.61%
Values	Daily Returns

CVR Energy  vs.  Bank of Utica

CVR Energy

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CVR Energy are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly conflicting basic indicators, CVR Energy demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Bank of Utica

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bank of Utica has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with CVR Energy and Bank of Utica

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

The idea behind CVR Energy and Bank of Utica 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.