Correlation Between CVR Energy and Icahn Enterprises

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

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

Diversification Opportunities for CVR Energy and Icahn Enterprises

0.05

Correlation Coefficient

CVR Energy  Icahn Enterprises

Significant diversification

The 3 months correlation between CVR and Icahn is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding CVR Energy and Icahn Enterprises LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icahn Enterprises 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 Icahn Enterprises. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icahn Enterprises has no effect on the direction of CVR Energy i.e., CVR Energy and Icahn Enterprises go up and down completely randomly.

Pair Corralation between CVR Energy and Icahn Enterprises

Considering the 90-day investment horizon CVR Energy is expected to generate 0.72 times more return on investment than Icahn Enterprises. However, CVR Energy is 1.4 times less risky than Icahn Enterprises. It trades about -0.01 of its potential returns per unit of risk. Icahn Enterprises LP is currently generating about -0.06 per unit of risk. If you would invest  2,448  in CVR Energy on December 4, 2024 and sell it today you would lose (656.00) from holding CVR Energy or give up 26.8% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

CVR Energy  vs.  Icahn Enterprises LP

CVR Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days CVR Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, CVR Energy is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Icahn Enterprises

Risk-Adjusted Performance

Very Weak

Over the last 90 days Icahn Enterprises LP has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest conflicting performance, the Stock's technical and fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with CVR Energy and Icahn Enterprises

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

The idea behind CVR Energy and Icahn Enterprises LP 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.