Correlation Between Eastern and CVR Partners

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

By analyzing existing cross correlation between Eastern Co and CVR Partners LP, you can compare the effects of market volatilities on Eastern and CVR Partners 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 Eastern with a short position of CVR Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastern and CVR Partners.

Diversification Opportunities for Eastern and CVR Partners

-0.47

Correlation Coefficient

Eastern  CVR Partners

Very good diversification

The 3 months correlation between Eastern and CVR is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Eastern Co and CVR Partners LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVR Partners LP and Eastern 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 Eastern Co are associated (or correlated) with CVR Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVR Partners LP has no effect on the direction of Eastern i.e., Eastern and CVR Partners go up and down completely randomly.

Pair Corralation between Eastern and CVR Partners

Considering the 90-day investment horizon Eastern Co is expected to under-perform the CVR Partners. In addition to that, Eastern is 1.13 times more volatile than CVR Partners LP. It trades about -0.09 of its total potential returns per unit of risk. CVR Partners LP is currently generating about 0.17 per unit of volatility. If you would invest  6,886  in CVR Partners LP on October 24, 2024 and sell it today you would earn a total of  1,508  from holding CVR Partners LP or generate 21.9% return on investment over 90 days.

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

Eastern Co  vs.  CVR Partners LP

Eastern

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eastern Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's primary indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

CVR Partners LP

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CVR Partners LP are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, CVR Partners displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eastern and CVR Partners

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

The idea behind Eastern Co and CVR Partners 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.