Correlation Between CVR Partners and Nike

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

Diversification Opportunities for CVR Partners and Nike

-0.25

Correlation Coefficient

CVR Partners  Nike

Very good diversification

The 3 months correlation between CVR and Nike is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding CVR Partners LP and Nike Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nike 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 Nike. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nike Inc has no effect on the direction of CVR Partners i.e., CVR Partners and Nike go up and down completely randomly.

Pair Corralation between CVR Partners and Nike

Considering the 90-day investment horizon CVR Partners LP is expected to generate 1.58 times more return on investment than Nike. However, CVR Partners is 1.58 times more volatile than Nike Inc. It trades about 0.1 of its potential returns per unit of risk. Nike Inc is currently generating about -0.1 per unit of risk. If you would invest  6,800  in CVR Partners LP on October 6, 2024 and sell it today you would earn a total of  897.00  from holding CVR Partners LP or generate 13.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

CVR Partners LP  vs.  Nike Inc

CVR Partners LP

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CVR Partners LP are ranked lower than 8 (%) 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.

Nike Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nike Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's forward-looking signals remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with CVR Partners and Nike

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

The idea behind CVR Partners LP and Nike 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..