Correlation Between CVR Energy and Community Bankers

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

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

Diversification Opportunities for CVR Energy and Community Bankers

-0.45

Correlation Coefficient

CVR Energy  Community Bankers

Very good diversification

The 3 months correlation between CVR and Community is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding CVR Energy and Community Bankers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Community Bankers 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 Community Bankers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Community Bankers has no effect on the direction of CVR Energy i.e., CVR Energy and Community Bankers go up and down completely randomly.

Pair Corralation between CVR Energy and Community Bankers

Considering the 90-day investment horizon CVR Energy is expected to generate 4.15 times more return on investment than Community Bankers. However, CVR Energy is 4.15 times more volatile than Community Bankers. It trades about 0.28 of its potential returns per unit of risk. Community Bankers is currently generating about 0.4 per unit of risk. If you would invest  1,644  in CVR Energy on September 4, 2024 and sell it today you would earn a total of  324.00  from holding CVR Energy or generate 19.71% return on investment over 90 days.

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

CVR Energy  vs.  Community Bankers

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 conflicting performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Community Bankers

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Community Bankers are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Community Bankers may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with CVR Energy and Community Bankers

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

The idea behind CVR Energy and Community Bankers 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 Anywhere module to track or share privately all of your investments from the convenience of any device.