Correlation Between CVR Partners and Logility Supply

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

Diversification Opportunities for CVR Partners and Logility Supply

0.23

Correlation Coefficient

CVR Partners  Logility Supply

Modest diversification

The 3 months correlation between CVR and Logility is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding CVR Partners LP and Logility Supply Chain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Logility Supply Chain 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 Logility Supply. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Logility Supply Chain has no effect on the direction of CVR Partners i.e., CVR Partners and Logility Supply go up and down completely randomly.

Pair Corralation between CVR Partners and Logility Supply

Considering the 90-day investment horizon CVR Partners is expected to generate 5.4 times less return on investment than Logility Supply. But when comparing it to its historical volatility, CVR Partners LP is 2.11 times less risky than Logility Supply. It trades about 0.06 of its potential returns per unit of risk. Logility Supply Chain is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1,074  in Logility Supply Chain on December 20, 2024 and sell it today you would earn a total of  349.00  from holding Logility Supply Chain or generate 32.5% return on investment over 90 days.

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

CVR Partners LP  vs.  Logility Supply Chain

CVR Partners LP

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CVR Partners LP are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, CVR Partners is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Logility Supply Chain

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Logility Supply Chain are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Logility Supply showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CVR Partners and Logility Supply

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

The idea behind CVR Partners LP and Logility Supply Chain 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.