Correlation Between CF Industries and Taseko Mines

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

Diversification Opportunities for CF Industries and Taseko Mines

-0.32

Correlation Coefficient

CF Industries  Taseko Mines

Very good diversification

The 3 months correlation between CF Industries and Taseko is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding CF Industries Holdings and Taseko Mines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taseko Mines 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 Taseko Mines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taseko Mines has no effect on the direction of CF Industries i.e., CF Industries and Taseko Mines go up and down completely randomly.

Pair Corralation between CF Industries and Taseko Mines

Allowing for the 90-day total investment horizon CF Industries Holdings is expected to under-perform the Taseko Mines. But the stock apears to be less risky and, when comparing its historical volatility, CF Industries Holdings is 1.45 times less risky than Taseko Mines. The stock trades about -0.09 of its potential returns per unit of risk. The Taseko Mines is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  208.00  in Taseko Mines on September 20, 2024 and sell it today you would lose (6.00) from holding Taseko Mines or give up 2.88% of portfolio value over 90 days.

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

CF Industries Holdings  vs.  Taseko Mines

CF Industries Holdings

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CF Industries Holdings are ranked lower than 3 (%) 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 current stock price disturbance, may contribute to mid-run losses for the stockholders.

Taseko Mines

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Taseko Mines has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with CF Industries and Taseko Mines

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

The idea behind CF Industries Holdings and Taseko Mines 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.