Correlation Between CVR Partners and Renault SA

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

Diversification Opportunities for CVR Partners and Renault SA

0.24

Correlation Coefficient

CVR Partners  Renault SA

Modest diversification

The 3 months correlation between CVR and Renault is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding CVR Partners LP and Renault SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Renault SA 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 Renault SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Renault SA has no effect on the direction of CVR Partners i.e., CVR Partners and Renault SA go up and down completely randomly.

Pair Corralation between CVR Partners and Renault SA

Considering the 90-day investment horizon CVR Partners is expected to generate 1.66 times less return on investment than Renault SA. In addition to that, CVR Partners is 1.41 times more volatile than Renault SA. It trades about 0.06 of its total potential returns per unit of risk. Renault SA is currently generating about 0.13 per unit of volatility. If you would invest  4,860  in Renault SA on December 20, 2024 and sell it today you would earn a total of  435.00  from holding Renault SA or generate 8.95% 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.  Renault SA

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.

Renault SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Renault SA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain fundamental indicators, Renault SA may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with CVR Partners and Renault SA

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

The idea behind CVR Partners LP and Renault SA 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.