Correlation Between CVR Energy and Lewis Clark

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

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

Diversification Opportunities for CVR Energy and Lewis Clark

-0.69

Correlation Coefficient

CVR Energy  Lewis Clark

Excellent diversification

The 3 months correlation between CVR and Lewis is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding CVR Energy and Lewis Clark Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lewis Clark Bancorp 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 Lewis Clark. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lewis Clark Bancorp has no effect on the direction of CVR Energy i.e., CVR Energy and Lewis Clark go up and down completely randomly.

Pair Corralation between CVR Energy and Lewis Clark

Considering the 90-day investment horizon CVR Energy is expected to under-perform the Lewis Clark. In addition to that, CVR Energy is 3.01 times more volatile than Lewis Clark Bancorp. It trades about -0.05 of its total potential returns per unit of risk. Lewis Clark Bancorp is currently generating about 0.24 per unit of volatility. If you would invest  2,151  in Lewis Clark Bancorp on September 12, 2024 and sell it today you would earn a total of  849.00  from holding Lewis Clark Bancorp or generate 39.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.2%
Values	Daily Returns

CVR Energy  vs.  Lewis Clark Bancorp

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 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.

Lewis Clark Bancorp

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Lewis Clark Bancorp are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile fundamental indicators, Lewis Clark disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CVR Energy and Lewis Clark

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

The idea behind CVR Energy and Lewis Clark Bancorp 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.