Correlation Between Microlise Group and CVR Energy
Can any of the company-specific risk be diversified away by investing in both Microlise Group 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 Microlise Group and CVR Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microlise Group PLC and CVR Energy, you can compare the effects of market volatilities on Microlise Group 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 Microlise Group with a short position of CVR Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microlise Group and CVR Energy.
Diversification Opportunities for Microlise Group and CVR Energy
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Microlise and CVR is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Microlise Group PLC and CVR Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVR Energy and Microlise Group 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 Microlise Group PLC 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 Microlise Group i.e., Microlise Group and CVR Energy go up and down completely randomly.
Pair Corralation between Microlise Group and CVR Energy
Assuming the 90 days trading horizon Microlise Group PLC is expected to under-perform the CVR Energy. But the stock apears to be less risky and, when comparing its historical volatility, Microlise Group PLC is 1.09 times less risky than CVR Energy. The stock trades about -0.08 of its potential returns per unit of risk. The CVR Energy is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 1,602 in CVR Energy on September 2, 2024 and sell it today you would earn a total of 324.00 from holding CVR Energy or generate 20.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Microlise Group PLC vs. CVR Energy
Performance |
| Timeline |
| Microlise Group PLC |
| CVR Energy |
Microlise Group and CVR Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microlise Group and CVR Energy
The main advantage of trading using opposite Microlise Group and CVR Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microlise Group 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.| Microlise Group vs. SupplyMe Capital PLC | Microlise Group vs. Lloyds Banking Group | Microlise Group vs. Premier African Minerals | Microlise Group vs. SANTANDER UK 8 |
| CVR Energy vs. Uniper SE | CVR Energy vs. Mulberry Group PLC | CVR Energy vs. London Security Plc | CVR Energy vs. Triad Group PLC |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
Other Complementary Tools
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum |