Correlation Between CVR Energy and Ceres Power
Can any of the company-specific risk be diversified away by investing in both CVR Energy and Ceres Power 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 Ceres Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CVR Energy and Ceres Power Holdings, you can compare the effects of market volatilities on CVR Energy and Ceres Power 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 Ceres Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVR Energy and Ceres Power.
Diversification Opportunities for CVR Energy and Ceres Power
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CVR and Ceres is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding CVR Energy and Ceres Power Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ceres Power Holdings 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 Ceres Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ceres Power Holdings has no effect on the direction of CVR Energy i.e., CVR Energy and Ceres Power go up and down completely randomly.
Pair Corralation between CVR Energy and Ceres Power
Assuming the 90 days trading horizon CVR Energy is expected to under-perform the Ceres Power. But the stock apears to be less risky and, when comparing its historical volatility, CVR Energy is 1.69 times less risky than Ceres Power. The stock trades about -0.05 of its potential returns per unit of risk. The Ceres Power Holdings is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 18,360 in Ceres Power Holdings on September 14, 2024 and sell it today you would lose (1,010) from holding Ceres Power Holdings or give up 5.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 96.41% |
| Values | Daily Returns |
CVR Energy vs. Ceres Power Holdings
Performance |
| Timeline |
| CVR Energy |
| Ceres Power Holdings |
CVR Energy and Ceres Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVR Energy and Ceres Power
The main advantage of trading using opposite CVR Energy and Ceres Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVR Energy position performs unexpectedly, Ceres Power 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 Ceres Power will offset losses from the drop in Ceres Power's long position.| CVR Energy vs. Liontrust Asset Management | CVR Energy vs. United Airlines Holdings | CVR Energy vs. LBG Media PLC | CVR Energy vs. AcadeMedia AB |
| Ceres Power vs. CAP LEASE AVIATION | Ceres Power vs. Fortune Brands Home | Ceres Power vs. Cairo Communication SpA | Ceres Power vs. Applied Materials |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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