Correlation Between CVR Partners and Stepan
Can any of the company-specific risk be diversified away by investing in both CVR Partners and Stepan 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 Partners and Stepan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CVR Partners LP and Stepan Company, you can compare the effects of market volatilities on CVR Partners and Stepan 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 Partners with a short position of Stepan. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVR Partners and Stepan.
Diversification Opportunities for CVR Partners and Stepan
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between CVR and Stepan is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding CVR Partners LP and Stepan Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stepan Company and CVR Partners 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 Partners LP are associated (or correlated) with Stepan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stepan Company has no effect on the direction of CVR Partners i.e., CVR Partners and Stepan go up and down completely randomly.
Pair Corralation between CVR Partners and Stepan
Considering the 90-day investment horizon CVR Partners LP is expected to generate 1.14 times more return on investment than Stepan. However, CVR Partners is 1.14 times more volatile than Stepan Company. It trades about 0.01 of its potential returns per unit of risk. Stepan Company is currently generating about -0.01 per unit of risk. If you would invest 7,890 in CVR Partners LP on August 30, 2024 and sell it today you would lose (313.00) from holding CVR Partners LP or give up 3.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CVR Partners LP vs. Stepan Company
Performance |
| Timeline |
| CVR Partners LP |
| Stepan Company |
CVR Partners and Stepan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVR Partners and Stepan
The main advantage of trading using opposite CVR Partners and Stepan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVR Partners position performs unexpectedly, Stepan 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 Stepan will offset losses from the drop in Stepan's long position.| 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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