Correlation Between CVR Energy and Clean Energy
Can any of the company-specific risk be diversified away by investing in both CVR Energy and Clean 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 CVR Energy and Clean Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CVR Energy and Clean Energy Fuels, you can compare the effects of market volatilities on CVR Energy and Clean 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 CVR Energy with a short position of Clean Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVR Energy and Clean Energy.
Diversification Opportunities for CVR Energy and Clean Energy
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between CVR and Clean is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding CVR Energy and Clean Energy Fuels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clean Energy Fuels 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 Clean Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clean Energy Fuels has no effect on the direction of CVR Energy i.e., CVR Energy and Clean Energy go up and down completely randomly.
Pair Corralation between CVR Energy and Clean Energy
Considering the 90-day investment horizon CVR Energy is expected to generate 0.62 times more return on investment than Clean Energy. However, CVR Energy is 1.6 times less risky than Clean Energy. It trades about -0.15 of its potential returns per unit of risk. Clean Energy Fuels is currently generating about -0.17 per unit of risk. If you would invest 1,928 in CVR Energy on September 25, 2024 and sell it today you would lose (120.00) from holding CVR Energy or give up 6.22% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
CVR Energy vs. Clean Energy Fuels
Performance |
Timeline |
CVR Energy |
Clean Energy Fuels |
CVR Energy and Clean Energy Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with CVR Energy and Clean Energy
The main advantage of trading using opposite CVR Energy and Clean Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVR Energy position performs unexpectedly, Clean 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 Clean Energy will offset losses from the drop in Clean Energy's long position.CVR Energy vs. Marathon Petroleum Corp | CVR Energy vs. Delek Energy | CVR Energy vs. Sunoco LP | CVR Energy vs. HF Sinclair Corp |
Clean Energy vs. Marathon Petroleum Corp | Clean Energy vs. Delek Energy | Clean Energy vs. Sunoco LP | Clean Energy vs. HF Sinclair Corp |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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