Correlation Between One Media and CVR Energy

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

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

Diversification Opportunities for One Media and CVR Energy

0.08

Correlation Coefficient

One Media  CVR Energy

Significant diversification

The 3 months correlation between One and CVR is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding One Media iP and CVR Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVR Energy and One Media 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 One Media iP 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 One Media i.e., One Media and CVR Energy go up and down completely randomly.

Pair Corralation between One Media and CVR Energy

Assuming the 90 days trading horizon One Media is expected to generate 44.53 times less return on investment than CVR Energy. But when comparing it to its historical volatility, One Media iP is 2.29 times less risky than CVR Energy. It trades about 0.01 of its potential returns per unit of risk. CVR Energy is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,779  in CVR Energy on December 23, 2024 and sell it today you would earn a total of  362.00  from holding CVR Energy or generate 20.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	93.65%
Values	Daily Returns

One Media iP  vs.  CVR Energy

One Media iP

Risk-Adjusted Performance

Very Weak

Over the last 90 days One Media iP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, One Media is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

CVR Energy

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CVR Energy are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, CVR Energy unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with One Media and CVR Energy

The main advantage of trading using opposite One Media and CVR Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if One Media 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 One Media iP 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.