Correlation Between CVR Partners and PennantPark Investment

Can any of the company-specific risk be diversified away by investing in both CVR Partners and PennantPark Investment 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 PennantPark Investment 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 PennantPark Investment, you can compare the effects of market volatilities on CVR Partners and PennantPark Investment 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 PennantPark Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVR Partners and PennantPark Investment.

Diversification Opportunities for CVR Partners and PennantPark Investment

0.75

Correlation Coefficient

CVR Partners  PennantPark Investment

Poor diversification

The 3 months correlation between CVR and PennantPark is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding CVR Partners LP and PennantPark Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PennantPark Investment 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 PennantPark Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PennantPark Investment has no effect on the direction of CVR Partners i.e., CVR Partners and PennantPark Investment go up and down completely randomly.

Pair Corralation between CVR Partners and PennantPark Investment

Considering the 90-day investment horizon CVR Partners LP is expected to generate 0.99 times more return on investment than PennantPark Investment. However, CVR Partners LP is 1.01 times less risky than PennantPark Investment. It trades about 0.27 of its potential returns per unit of risk. PennantPark Investment is currently generating about 0.19 per unit of risk. If you would invest  7,934  in CVR Partners LP on May 6, 2025 and sell it today you would earn a total of  1,782  from holding CVR Partners LP or generate 22.46% return on investment over 90 days.

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

CVR Partners LP  vs.  PennantPark Investment

CVR Partners LP

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CVR Partners LP are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, CVR Partners displayed solid returns over the last few months and may actually be approaching a breakup point.

PennantPark Investment

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PennantPark Investment are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, PennantPark Investment unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CVR Partners and PennantPark Investment

The main advantage of trading using opposite CVR Partners and PennantPark Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVR Partners position performs unexpectedly, PennantPark Investment 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 PennantPark Investment will offset losses from the drop in PennantPark Investment's long position.

The idea behind CVR Partners LP and PennantPark Investment 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.