Correlation Between CVR Partners and GABY

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

Diversification Opportunities for CVR Partners and GABY

0.0

Correlation Coefficient

CVR Partners  GABY

Pay attention - limited upside

The 3 months correlation between CVR and GABY is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding CVR Partners LP and GABY Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GABY Inc 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 GABY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GABY Inc has no effect on the direction of CVR Partners i.e., CVR Partners and GABY go up and down completely randomly.

Pair Corralation between CVR Partners and GABY

Considering the 90-day investment horizon CVR Partners is expected to generate 39.26 times less return on investment than GABY. But when comparing it to its historical volatility, CVR Partners LP is 12.58 times less risky than GABY. It trades about 0.02 of its potential returns per unit of risk. GABY Inc is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  0.80  in GABY Inc on October 5, 2024 and sell it today you would lose (0.66) from holding GABY Inc or give up 82.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	80.25%
Values	Daily Returns

CVR Partners LP  vs.  GABY Inc

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 displayed solid returns over the last few months and may actually be approaching a breakup point.

GABY Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GABY Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, GABY is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with CVR Partners and GABY

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

The idea behind CVR Partners LP and GABY Inc 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.