Correlation Between Whitbread PLC and CVR Energy
Can any of the company-specific risk be diversified away by investing in both Whitbread PLC 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 Whitbread PLC and CVR Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Whitbread PLC and CVR Energy, you can compare the effects of market volatilities on Whitbread PLC 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 Whitbread PLC with a short position of CVR Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Whitbread PLC and CVR Energy.
Diversification Opportunities for Whitbread PLC and CVR Energy
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Whitbread and CVR is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Whitbread PLC and CVR Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVR Energy and Whitbread PLC 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 Whitbread 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 Whitbread PLC i.e., Whitbread PLC and CVR Energy go up and down completely randomly.
Pair Corralation between Whitbread PLC and CVR Energy
Assuming the 90 days trading horizon Whitbread PLC is expected to under-perform the CVR Energy. But the stock apears to be less risky and, when comparing its historical volatility, Whitbread PLC is 4.78 times less risky than CVR Energy. The stock trades about -0.28 of its potential returns per unit of risk. The CVR Energy is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 1,624 in CVR Energy on September 1, 2024 and sell it today you would earn a total of 322.00 from holding CVR Energy or generate 19.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Whitbread PLC vs. CVR Energy
Performance |
| Timeline |
| Whitbread PLC |
| CVR Energy |
Whitbread PLC and CVR Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Whitbread PLC and CVR Energy
The main advantage of trading using opposite Whitbread PLC and CVR Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Whitbread PLC 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.| Whitbread PLC vs. Viridian Therapeutics | Whitbread PLC vs. CVR Energy | Whitbread PLC vs. Nationwide Building Society | Whitbread PLC vs. Dollar Tree |
| CVR Energy vs. Fevertree Drinks Plc | CVR Energy vs. National Beverage Corp | CVR Energy vs. Charter Communications Cl | CVR Energy vs. Supermarket Income REIT |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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