Correlation Between CVR Energy and Ampol

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

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

Diversification Opportunities for CVR Energy and Ampol

0.68

Correlation Coefficient

CVR Energy  Ampol

Poor diversification

The 3 months correlation between CVR and Ampol is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding CVR Energy and Ampol Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ampol Ltd ADR 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 Ampol. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ampol Ltd ADR has no effect on the direction of CVR Energy i.e., CVR Energy and Ampol go up and down completely randomly.

Pair Corralation between CVR Energy and Ampol

Considering the 90-day investment horizon CVR Energy is expected to under-perform the Ampol. In addition to that, CVR Energy is 1.81 times more volatile than Ampol Ltd ADR. It trades about -0.01 of its total potential returns per unit of risk. Ampol Ltd ADR is currently generating about 0.02 per unit of volatility. If you would invest  3,471  in Ampol Ltd ADR on September 5, 2024 and sell it today you would earn a total of  235.00  from holding Ampol Ltd ADR or generate 6.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

CVR Energy  vs.  Ampol Ltd ADR

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 latest conflicting performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Ampol Ltd ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ampol Ltd ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Ampol is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with CVR Energy and Ampol

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

The idea behind CVR Energy and Ampol Ltd ADR 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.