Correlation Between Niagara Mohawk and CVR Partners
Can any of the company-specific risk be diversified away by investing in both Niagara Mohawk and CVR Partners 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 Niagara Mohawk and CVR Partners into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Niagara Mohawk Power and CVR Partners LP, you can compare the effects of market volatilities on Niagara Mohawk and CVR Partners 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 Niagara Mohawk with a short position of CVR Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of Niagara Mohawk and CVR Partners.
Diversification Opportunities for Niagara Mohawk and CVR Partners
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Niagara and CVR is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Niagara Mohawk Power and CVR Partners LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVR Partners LP and Niagara Mohawk 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 Niagara Mohawk Power are associated (or correlated) with CVR Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVR Partners LP has no effect on the direction of Niagara Mohawk i.e., Niagara Mohawk and CVR Partners go up and down completely randomly.
Pair Corralation between Niagara Mohawk and CVR Partners
Assuming the 90 days horizon Niagara Mohawk is expected to generate 2.63 times less return on investment than CVR Partners. In addition to that, Niagara Mohawk is 1.1 times more volatile than CVR Partners LP. It trades about 0.01 of its total potential returns per unit of risk. CVR Partners LP is currently generating about 0.02 per unit of volatility. If you would invest 7,554 in CVR Partners LP on September 1, 2024 and sell it today you would earn a total of 606.00 from holding CVR Partners LP or generate 8.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 61.62% |
| Values | Daily Returns |
Niagara Mohawk Power vs. CVR Partners LP
Performance |
| Timeline |
| Niagara Mohawk Power |
| CVR Partners LP |
Niagara Mohawk and CVR Partners Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Niagara Mohawk and CVR Partners
The main advantage of trading using opposite Niagara Mohawk and CVR Partners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Niagara Mohawk position performs unexpectedly, CVR Partners 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 Partners will offset losses from the drop in CVR Partners' long position.| Niagara Mohawk vs. Legacy Education | Niagara Mohawk vs. Apple Inc | Niagara Mohawk vs. NVIDIA | Niagara Mohawk vs. Microsoft |
| CVR Partners vs. CF Industries Holdings | CVR Partners vs. The Mosaic | CVR Partners vs. American Vanguard | CVR Partners vs. ICL Israel Chemicals |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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