Correlation Between Clean Energy and CVR Energy
Can any of the company-specific risk be diversified away by investing in both Clean Energy and CVR Energy 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 Clean Energy and CVR Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Clean Energy Fuels and CVR Energy, you can compare the effects of market volatilities on Clean Energy and CVR Energy 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 Clean Energy with a short position of CVR Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clean Energy and CVR Energy.
Diversification Opportunities for Clean Energy and CVR Energy
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Clean and CVR is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Clean Energy Fuels and CVR Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVR Energy and Clean 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 Clean Energy Fuels are associated (or correlated) with CVR Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVR Energy has no effect on the direction of Clean Energy i.e., Clean Energy and CVR Energy go up and down completely randomly.
Pair Corralation between Clean Energy and CVR Energy
Given the investment horizon of 90 days Clean Energy Fuels is expected to under-perform the CVR Energy. In addition to that, Clean Energy is 1.31 times more volatile than CVR Energy. It trades about -0.02 of its total potential returns per unit of risk. CVR Energy is currently generating about -0.01 per unit of volatility. If you would invest 2,666 in CVR Energy on August 27, 2024 and sell it today you would lose (792.00) from holding CVR Energy or give up 29.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Clean Energy Fuels vs. CVR Energy
Performance |
| Timeline |
| Clean Energy Fuels |
| CVR Energy |
Clean Energy and CVR Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clean Energy and CVR Energy
The main advantage of trading using opposite Clean Energy and CVR Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clean Energy position performs unexpectedly, CVR Energy 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 CVR Energy will offset losses from the drop in CVR Energy's long position.| Clean Energy vs. Vertex Energy | Clean Energy vs. Icahn Enterprises LP | Clean Energy vs. PBF Energy | Clean Energy vs. Delek Logistics Partners |
| CVR Energy vs. Delek Logistics Partners | CVR Energy vs. PBF Energy | CVR Energy vs. HF Sinclair Corp | CVR Energy vs. Par Pacific Holdings |
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 Stocks Directory module to find actively traded stocks across global markets.
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