Correlation Between Icahn Enterprises and CVR Energy

Can any of the company-specific risk be diversified away by investing in both Icahn Enterprises 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 Icahn Enterprises and CVR Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Icahn Enterprises LP and CVR Energy, you can compare the effects of market volatilities on Icahn Enterprises 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 Icahn Enterprises with a short position of CVR Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Icahn Enterprises and CVR Energy.

Diversification Opportunities for Icahn Enterprises and CVR Energy

0.72

Correlation Coefficient

Icahn Enterprises  CVR Energy

Poor diversification

The 3 months correlation between Icahn and CVR is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Icahn Enterprises LP and CVR Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVR Energy and Icahn Enterprises 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 Icahn Enterprises LP 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 Icahn Enterprises i.e., Icahn Enterprises and CVR Energy go up and down completely randomly.

Pair Corralation between Icahn Enterprises and CVR Energy

Considering the 90-day investment horizon Icahn Enterprises LP is expected to under-perform the CVR Energy. But the stock apears to be less risky and, when comparing its historical volatility, Icahn Enterprises LP is 1.48 times less risky than CVR Energy. The stock trades about -0.02 of its potential returns per unit of risk. The CVR Energy is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,892  in CVR Energy on February 3, 2025 and sell it today you would earn a total of  128.00  from holding CVR Energy or generate 6.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Icahn Enterprises LP  vs.  CVR Energy

Icahn Enterprises

Risk-Adjusted Performance

Very Weak

Over the last 90 days Icahn Enterprises LP has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, Icahn Enterprises is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

CVR Energy

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CVR Energy are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly conflicting basic indicators, CVR Energy may actually be approaching a critical reversion point that can send shares even higher in June 2025.

Pair Trading with Icahn Enterprises and CVR Energy

The main advantage of trading using opposite Icahn Enterprises and CVR Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Icahn Enterprises 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.

The idea behind Icahn Enterprises LP and CVR Energy pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.