Correlation Between PBF Energy and CVR Energy

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

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

Diversification Opportunities for PBF Energy and CVR Energy

0.49

Correlation Coefficient

PBF Energy  CVR Energy

Very weak diversification

The 3 months correlation between PBF and CVR is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding PBF Energy and CVR Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVR Energy and PBF 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 PBF Energy 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 PBF Energy i.e., PBF Energy and CVR Energy go up and down completely randomly.

Pair Corralation between PBF Energy and CVR Energy

Considering the 90-day investment horizon PBF Energy is expected to under-perform the CVR Energy. But the stock apears to be less risky and, when comparing its historical volatility, PBF Energy is 1.02 times less risky than CVR Energy. The stock trades about -0.03 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  2,613  in CVR Energy on November 19, 2024 and sell it today you would lose (757.00) from holding CVR Energy or give up 28.97% of portfolio value over 90 days.

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

PBF Energy  vs.  CVR Energy

PBF Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days PBF Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental drivers remain nearly stable which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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. 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.

Pair Trading with PBF Energy and CVR Energy

The main advantage of trading using opposite PBF Energy and CVR Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PBF Energy 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 PBF Energy 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.

Check out your portfolio center.

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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.