Correlation Between CVR Energy and Extra Space
Can any of the company-specific risk be diversified away by investing in both CVR Energy and Extra Space 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 Extra Space into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CVR Energy and Extra Space Storage, you can compare the effects of market volatilities on CVR Energy and Extra Space 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 Extra Space. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVR Energy and Extra Space.
Diversification Opportunities for CVR Energy and Extra Space
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CVR and Extra is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding CVR Energy and Extra Space Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Extra Space Storage 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 Extra Space. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Extra Space Storage has no effect on the direction of CVR Energy i.e., CVR Energy and Extra Space go up and down completely randomly.
Pair Corralation between CVR Energy and Extra Space
Assuming the 90 days trading horizon CVR Energy is expected to generate 2.16 times more return on investment than Extra Space. However, CVR Energy is 2.16 times more volatile than Extra Space Storage. It trades about 0.23 of its potential returns per unit of risk. Extra Space Storage is currently generating about 0.1 per unit of risk. If you would invest 1,624 in CVR Energy on September 1, 2024 and sell it today you would earn a total of 322.00 from holding CVR Energy or generate 19.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
CVR Energy vs. Extra Space Storage
Performance |
| Timeline |
| CVR Energy |
| Extra Space Storage |
CVR Energy and Extra Space Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVR Energy and Extra Space
The main advantage of trading using opposite CVR Energy and Extra Space positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVR Energy position performs unexpectedly, Extra Space 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 Extra Space will offset losses from the drop in Extra Space's long position.| CVR Energy vs. Fevertree Drinks Plc | CVR Energy vs. National Beverage Corp | CVR Energy vs. Charter Communications Cl | CVR Energy vs. Supermarket Income REIT |
| Extra Space vs. AcadeMedia AB | Extra Space vs. Ecclesiastical Insurance Office | Extra Space vs. Fortune Brands Home | Extra Space vs. G5 Entertainment AB |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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