Correlation Between Stepan and CVR Partners
Can any of the company-specific risk be diversified away by investing in both Stepan and CVR Partners 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 Stepan and CVR Partners into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stepan Company and CVR Partners LP, you can compare the effects of market volatilities on Stepan and CVR Partners 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 Stepan with a short position of CVR Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stepan and CVR Partners.
Diversification Opportunities for Stepan and CVR Partners
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Stepan and CVR is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Stepan Company and CVR Partners LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVR Partners LP and Stepan 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 Stepan Company are associated (or correlated) with CVR Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVR Partners LP has no effect on the direction of Stepan i.e., Stepan and CVR Partners go up and down completely randomly.
Pair Corralation between Stepan and CVR Partners
Considering the 90-day investment horizon Stepan Company is expected to under-perform the CVR Partners. In addition to that, Stepan is 1.4 times more volatile than CVR Partners LP. It trades about -0.14 of its total potential returns per unit of risk. CVR Partners LP is currently generating about 0.1 per unit of volatility. If you would invest 8,576 in CVR Partners LP on July 26, 2025 and sell it today you would earn a total of 782.00 from holding CVR Partners LP or generate 9.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stepan Company vs. CVR Partners LP
Performance |
| Timeline |
| Stepan Company |
| CVR Partners LP |
Stepan and CVR Partners Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stepan and CVR Partners
The main advantage of trading using opposite Stepan and CVR Partners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stepan position performs unexpectedly, CVR Partners 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 Partners will offset losses from the drop in CVR Partners' long position.The idea behind Stepan Company and CVR Partners LP 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.| CVR Partners vs. Ferroglobe PLC | CVR Partners vs. Standard Lithium | CVR Partners vs. Braskem SA Class | CVR Partners vs. Loma Negra Compania |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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