Correlation Between CF Industries and Loop Media

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

Diversification Opportunities for CF Industries and Loop Media

-0.01

Correlation Coefficient

CF Industries  Loop Media

Good diversification

The 3 months correlation between CF Industries and Loop is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding CF Industries Holdings and Loop Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loop Media 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 Loop Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loop Media has no effect on the direction of CF Industries i.e., CF Industries and Loop Media go up and down completely randomly.

Pair Corralation between CF Industries and Loop Media

Allowing for the 90-day total investment horizon CF Industries Holdings is expected to generate 0.07 times more return on investment than Loop Media. However, CF Industries Holdings is 14.01 times less risky than Loop Media. It trades about 0.07 of its potential returns per unit of risk. Loop Media is currently generating about -0.14 per unit of risk. If you would invest  7,551  in CF Industries Holdings on September 28, 2024 and sell it today you would earn a total of  958.00  from holding CF Industries Holdings or generate 12.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	11.43%
Values	Daily Returns

CF Industries Holdings  vs.  Loop Media

CF Industries Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CF Industries Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, CF Industries is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Loop Media

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Loop Media has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Loop Media is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with CF Industries and Loop Media

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

The idea behind CF Industries Holdings and Loop Media 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .