Correlation Between CF Industries and Arrayit

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

By analyzing existing cross correlation between CF Industries Holdings and Arrayit, you can compare the effects of market volatilities on CF Industries and Arrayit 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 CF Industries with a short position of Arrayit. Check out your portfolio center. Please also check ongoing floating volatility patterns of CF Industries and Arrayit.

Diversification Opportunities for CF Industries and Arrayit

0.0

Correlation Coefficient

CF Industries  Arrayit

Pay attention - limited upside

The 3 months correlation between CF Industries and Arrayit is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding CF Industries Holdings and Arrayit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrayit and CF Industries 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 CF Industries Holdings are associated (or correlated) with Arrayit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arrayit has no effect on the direction of CF Industries i.e., CF Industries and Arrayit go up and down completely randomly.

Pair Corralation between CF Industries and Arrayit

If you would invest  8,458  in CF Industries Holdings on October 10, 2024 and sell it today you would earn a total of  243.00  from holding CF Industries Holdings or generate 2.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	97.56%
Values	Daily Returns

CF Industries Holdings  vs.  Arrayit

CF Industries Holdings

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CF Industries Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, CF Industries is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Arrayit

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arrayit has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Arrayit is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with CF Industries and Arrayit

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

The idea behind CF Industries Holdings and Arrayit 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.