Correlation Between CVR Partners and Dividend

Can any of the company-specific risk be diversified away by investing in both CVR Partners and Dividend 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 Dividend 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 Dividend 15 Split, you can compare the effects of market volatilities on CVR Partners and Dividend 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 Dividend. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVR Partners and Dividend.

Diversification Opportunities for CVR Partners and Dividend

0.72

Correlation Coefficient

CVR Partners  Dividend

Poor diversification

The 3 months correlation between CVR and Dividend is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding CVR Partners LP and Dividend 15 Split in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dividend 15 Split 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 Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dividend 15 Split has no effect on the direction of CVR Partners i.e., CVR Partners and Dividend go up and down completely randomly.

Pair Corralation between CVR Partners and Dividend

Considering the 90-day investment horizon CVR Partners LP is expected to generate 3.56 times more return on investment than Dividend. However, CVR Partners is 3.56 times more volatile than Dividend 15 Split. It trades about 0.14 of its potential returns per unit of risk. Dividend 15 Split is currently generating about 0.22 per unit of risk. If you would invest  6,949  in CVR Partners LP on October 25, 2024 and sell it today you would earn a total of  1,327  from holding CVR Partners LP or generate 19.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

CVR Partners LP  vs.  Dividend 15 Split

CVR Partners LP

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CVR Partners LP are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, CVR Partners displayed solid returns over the last few months and may actually be approaching a breakup point.

Dividend 15 Split

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Dividend 15 Split are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, Dividend may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with CVR Partners and Dividend

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

The idea behind CVR Partners LP and Dividend 15 Split 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.