Correlation Between CVR Partners and Icon Energy

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

Diversification Opportunities for CVR Partners and Icon Energy

0.59

Correlation Coefficient

CVR Partners  Icon Energy

Very weak diversification

The 3 months correlation between CVR and Icon is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding CVR Partners LP and Icon Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icon Energy Corp 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 Icon Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icon Energy Corp has no effect on the direction of CVR Partners i.e., CVR Partners and Icon Energy go up and down completely randomly.

Pair Corralation between CVR Partners and Icon Energy

Considering the 90-day investment horizon CVR Partners LP is expected to generate 0.44 times more return on investment than Icon Energy. However, CVR Partners LP is 2.3 times less risky than Icon Energy. It trades about 0.02 of its potential returns per unit of risk. Icon Energy Corp is currently generating about -0.06 per unit of risk. If you would invest  6,998  in CVR Partners LP on October 11, 2024 and sell it today you would earn a total of  507.00  from holding CVR Partners LP or generate 7.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	25.25%
Values	Daily Returns

CVR Partners LP  vs.  Icon Energy Corp

CVR Partners LP

Risk-Adjusted Performance

5 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CVR Partners LP are ranked lower than 5 (%) 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.

Icon Energy Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Icon Energy Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Icon Energy displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CVR Partners and Icon Energy

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

The idea behind CVR Partners LP and Icon Energy Corp 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.