Correlation Between CF Industries and Spyre Therapeutics

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

Diversification Opportunities for CF Industries and Spyre Therapeutics

-0.5

Correlation Coefficient

CF Industries  Spyre Therapeutics

Very good diversification

The 3 months correlation between CF Industries and Spyre is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding CF Industries Holdings and Spyre Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spyre Therapeutics 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 Spyre Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spyre Therapeutics has no effect on the direction of CF Industries i.e., CF Industries and Spyre Therapeutics go up and down completely randomly.

Pair Corralation between CF Industries and Spyre Therapeutics

Allowing for the 90-day total investment horizon CF Industries is expected to generate 1.81 times less return on investment than Spyre Therapeutics. But when comparing it to its historical volatility, CF Industries Holdings is 2.64 times less risky than Spyre Therapeutics. It trades about 0.04 of its potential returns per unit of risk. Spyre Therapeutics is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  2,254  in Spyre Therapeutics on October 7, 2024 and sell it today you would earn a total of  181.00  from holding Spyre Therapeutics or generate 8.03% return on investment over 90 days.

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

CF Industries Holdings  vs.  Spyre Therapeutics

CF Industries Holdings

Risk-Adjusted Performance

1 of 100

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.

Spyre Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Spyre Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with CF Industries and Spyre Therapeutics

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

The idea behind CF Industries Holdings and Spyre Therapeutics 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.