Correlation Between Liontrust Asset and CVR Energy

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

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

Diversification Opportunities for Liontrust Asset and CVR Energy

-0.55

Correlation Coefficient

Liontrust Asset  CVR Energy

Excellent diversification

The 3 months correlation between Liontrust and CVR is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Liontrust Asset Management and CVR Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVR Energy and Liontrust Asset 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 Liontrust Asset Management are associated (or correlated) with CVR Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVR Energy has no effect on the direction of Liontrust Asset i.e., Liontrust Asset and CVR Energy go up and down completely randomly.

Pair Corralation between Liontrust Asset and CVR Energy

Assuming the 90 days trading horizon Liontrust Asset Management is expected to under-perform the CVR Energy. But the stock apears to be less risky and, when comparing its historical volatility, Liontrust Asset Management is 1.28 times less risky than CVR Energy. The stock trades about -0.05 of its potential returns per unit of risk. The CVR Energy is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  2,668  in CVR Energy on December 4, 2024 and sell it today you would lose (871.00) from holding CVR Energy or give up 32.65% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	88.13%
Values	Daily Returns

Liontrust Asset Management  vs.  CVR Energy

Liontrust Asset Mana

Risk-Adjusted Performance

Very Weak

Over the last 90 days Liontrust Asset Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

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. In spite of comparatively stable basic indicators, CVR Energy is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Liontrust Asset and CVR Energy

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

The idea behind Liontrust Asset Management and CVR Energy 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.