Correlation Between CVR Partners and Trump Media

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

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

Diversification Opportunities for CVR Partners and Trump Media

0.15

Correlation Coefficient

CVR Partners  Trump Media

Average diversification

The 3 months correlation between CVR and Trump is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding CVR Partners LP and Trump Media Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trump Media Technology and CVR Partners 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 Partners LP are associated (or correlated) with Trump Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trump Media Technology has no effect on the direction of CVR Partners i.e., CVR Partners and Trump Media go up and down completely randomly.

Pair Corralation between CVR Partners and Trump Media

Considering the 90-day investment horizon CVR Partners is expected to generate 10.57 times less return on investment than Trump Media. But when comparing it to its historical volatility, CVR Partners LP is 4.67 times less risky than Trump Media. It trades about 0.02 of its potential returns per unit of risk. Trump Media Technology is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2,315  in Trump Media Technology on October 10, 2024 and sell it today you would earn a total of  99.00  from holding Trump Media Technology or generate 4.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	42.07%
Values	Daily Returns

CVR Partners LP  vs.  Trump Media Technology

CVR Partners LP

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CVR Partners LP are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, CVR Partners may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Trump Media Technology

Risk-Adjusted Performance

9 of 100

Good

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

Pair Trading with CVR Partners and Trump Media

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

The idea behind CVR Partners LP and Trump Media Technology 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.