15.59 -0.09 (-0.57%) Sell

Prayers for CVA investors as it delivered massive losses

13 min read

COVANTA HOLDING CORP was among the worst performers today. It delivered -0.57% to close at 15.59. It's recent 5 day performance has been -0.51%, +1.81%, -0.13%, -0.77% and -1.14%.

[Themes containing CVA]

CVA is currently in a bearish trend. The current bearish signal has generated a profit of +8.56% for investors in the last three months.


CVA has been outperforming the SP500 index in recent time. It showed significant underperformance (compared to the SP500 index) from 17 Mar, 2016 to 2 Oct, 2018. Over the last 2 years 11 months and 10 days, CVA underperformed the SP500 index on 48% days. Which indicates that on days CVA underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.

During the last three months CVA delivered profits on 53% days. However, it still managed to end this period in a loss. It's best return during this period (of +3.06%) was on Thursday, 1 Nov, 2018. While it's worst loss in the same period (of -9.34%) was on Friday, 26 Oct, 2018. The longest stort-term trend during this period was 9 profitable days, which started on 29 Oct, 2018 and went on till 8 Nov, 2018. This bullish trend returned +9.51% to investors.

The last 12 months saw CVA's investors making profits in 5 months and incurring losses in 7 months. CVA was less consistent in delivering monthly returs than SP500 index. CVA significantly outperformed SP500 index in Nov 2018, when it returned +12.73% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. CVA had a shorter streak of profitable months than SP500 index. It only went up in 4 straight months during the last year. It is interesting to note that both CVA and SP500 index significantly outperform during months when quarterly/annual results are announced.

Outcome is simply the final score: Who won the game; what numbers came up in a roll of the dice; how high did a stock go. Outcome is the result, regardless of the method used to achieve it. It is not controllable.
-- Barry Ritholtz

CVA is currently seeing overall fall in volatility. In comparison, the SP500 index is seeing increase in volatility. During the last three months, there was a significant surge in CVA's volatility from 17 Sep, 2018 to 29 Oct, 2018. While there was a significant surge in the SP500 index's volatility from 25 Sep, 2018 to 29 Oct, 2018.

Advanced/professional short-term investors should note that CVA has significant positive skewness in it's return distribution. This indicates that investors can expect CVA to recover from drawdowns quickly. Which makes CVA a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.

SP500 index has more chance of extreme outcomes than CVA. Therefore, SP500 must receive a lower allocation than CVA in your portfolio. SP500 index usually has shorter drawdown period than CVA.

Based on your interest in CVA you may find it interesting to know that NRIM and UNF have both performed similar to CVA and can be considered by investors as alternative investment options.

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