Correlation Between CVR Energy and Par Pacific

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

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

Diversification Opportunities for CVR Energy and Par Pacific

0.33

Correlation Coefficient

CVR Energy  Par Pacific

Weak diversification

The 3 months correlation between CVR and Par is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding CVR Energy and Par Pacific Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Par Pacific Holdings 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 Par Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Par Pacific Holdings has no effect on the direction of CVR Energy i.e., CVR Energy and Par Pacific go up and down completely randomly.

Pair Corralation between CVR Energy and Par Pacific

Considering the 90-day investment horizon CVR Energy is expected to generate 0.9 times more return on investment than Par Pacific. However, CVR Energy is 1.12 times less risky than Par Pacific. It trades about 0.06 of its potential returns per unit of risk. Par Pacific Holdings is currently generating about -0.06 per unit of risk. If you would invest  1,829  in CVR Energy on December 26, 2024 and sell it today you would earn a total of  174.00  from holding CVR Energy or generate 9.51% return on investment over 90 days.

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

CVR Energy  vs.  Par Pacific Holdings

CVR Energy

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CVR Energy are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly conflicting basic indicators, CVR Energy may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Par Pacific Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Par Pacific Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with conflicting performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with CVR Energy and Par Pacific

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

The idea behind CVR Energy and Par Pacific Holdings 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.