Correlation Between CVR Energy and SMA Solar
Can any of the company-specific risk be diversified away by investing in both CVR Energy and SMA Solar 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 SMA Solar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CVR Energy and SMA Solar Technology, you can compare the effects of market volatilities on CVR Energy and SMA Solar 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 SMA Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVR Energy and SMA Solar.
Diversification Opportunities for CVR Energy and SMA Solar
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CVR and SMA is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding CVR Energy and SMA Solar Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SMA Solar Technology 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 SMA Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SMA Solar Technology has no effect on the direction of CVR Energy i.e., CVR Energy and SMA Solar go up and down completely randomly.
Pair Corralation between CVR Energy and SMA Solar
Assuming the 90 days trading horizon CVR Energy is expected to generate 0.86 times more return on investment than SMA Solar. However, CVR Energy is 1.16 times less risky than SMA Solar. It trades about -0.01 of its potential returns per unit of risk. SMA Solar Technology is currently generating about -0.07 per unit of risk. If you would invest 2,663 in CVR Energy on September 3, 2024 and sell it today you would lose (737.00) from holding CVR Energy or give up 27.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 84.94% |
| Values | Daily Returns |
CVR Energy vs. SMA Solar Technology
Performance |
| Timeline |
| CVR Energy |
| SMA Solar Technology |
CVR Energy and SMA Solar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVR Energy and SMA Solar
The main advantage of trading using opposite CVR Energy and SMA Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVR Energy position performs unexpectedly, SMA Solar 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 SMA Solar will offset losses from the drop in SMA Solar's long position.| CVR Energy vs. Compagnie Plastic Omnium | CVR Energy vs. Pfeiffer Vacuum Technology | CVR Energy vs. Spirent Communications plc | CVR Energy vs. Alfa Financial Software |
| SMA Solar vs. Catalyst Media Group | SMA Solar vs. CATLIN GROUP | SMA Solar vs. Tamburi Investment Partners | SMA Solar vs. Magnora ASA |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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