Correlation Between CVR Energy and Axon Enterprise
Can any of the company-specific risk be diversified away by investing in both CVR Energy and Axon Enterprise 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 Energy and Axon Enterprise into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CVR Energy and Axon Enterprise, you can compare the effects of market volatilities on CVR Energy and Axon Enterprise 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 Energy with a short position of Axon Enterprise. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVR Energy and Axon Enterprise.
Diversification Opportunities for CVR Energy and Axon Enterprise
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between CVR and Axon is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding CVR Energy and Axon Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axon Enterprise and CVR Energy 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 Energy are associated (or correlated) with Axon Enterprise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axon Enterprise has no effect on the direction of CVR Energy i.e., CVR Energy and Axon Enterprise go up and down completely randomly.
Pair Corralation between CVR Energy and Axon Enterprise
Assuming the 90 days trading horizon CVR Energy is expected to generate 2.48 times less return on investment than Axon Enterprise. But when comparing it to its historical volatility, CVR Energy is 1.51 times less risky than Axon Enterprise. It trades about 0.18 of its potential returns per unit of risk. Axon Enterprise is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 44,151 in Axon Enterprise on August 31, 2024 and sell it today you would earn a total of 19,122 from holding Axon Enterprise or generate 43.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CVR Energy vs. Axon Enterprise
Performance |
| Timeline |
| CVR Energy |
| Axon Enterprise |
CVR Energy and Axon Enterprise Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVR Energy and Axon Enterprise
The main advantage of trading using opposite CVR Energy and Axon Enterprise positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVR Energy position performs unexpectedly, Axon Enterprise 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 Axon Enterprise will offset losses from the drop in Axon Enterprise's long position.| CVR Energy vs. Advanced Medical Solutions | CVR Energy vs. Team Internet Group | CVR Energy vs. Alfa Financial Software | CVR Energy vs. Grand Vision Media |
| Axon Enterprise vs. Neometals | Axon Enterprise vs. Coor Service Management | Axon Enterprise vs. Aeorema Communications Plc | Axon Enterprise vs. JLEN Environmental Assets |
Check out your portfolio center.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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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