Correlation Between Icahn Enterprises and Vertex Energy

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

Diversification Opportunities for Icahn Enterprises and Vertex Energy

0.54

Correlation Coefficient

Icahn Enterprises  Vertex Energy

Very weak diversification

The 3 months correlation between Icahn and Vertex is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Icahn Enterprises LP and Vertex Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vertex 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 Vertex Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vertex Energy has no effect on the direction of Icahn Enterprises i.e., Icahn Enterprises and Vertex Energy go up and down completely randomly.

Pair Corralation between Icahn Enterprises and Vertex Energy

Considering the 90-day investment horizon Icahn Enterprises LP is expected to under-perform the Vertex Energy. But the stock apears to be less risky and, when comparing its historical volatility, Icahn Enterprises LP is 4.89 times less risky than Vertex Energy. The stock trades about -0.08 of its potential returns per unit of risk. The Vertex Energy is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  127.00  in Vertex Energy on January 29, 2024 and sell it today you would earn a total of  0.00  from holding Vertex Energy or generate 0.0% return on investment over 90 days.

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

Icahn Enterprises LP  vs.  Vertex Energy

Icahn Enterprises

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Icahn Enterprises LP are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Vertex Energy

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Icahn Enterprises and Vertex Energy

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

The idea behind Icahn Enterprises LP and Vertex 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.

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.