Correlation Between CF Industries and Crown

Can any of the company-specific risk be diversified away by investing in both CF Industries and Crown 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 Crown 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 Crown Cork 7375, you can compare the effects of market volatilities on CF Industries and Crown 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 Crown. Check out your portfolio center. Please also check ongoing floating volatility patterns of CF Industries and Crown.

Diversification Opportunities for CF Industries and Crown

0.0

Correlation Coefficient

CF Industries  Crown

Pay attention - limited upside

The 3 months correlation between CF Industries and Crown is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding CF Industries Holdings and Crown Cork 7375 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crown Cork 7375 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 Crown. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crown Cork 7375 has no effect on the direction of CF Industries i.e., CF Industries and Crown go up and down completely randomly.

Pair Corralation between CF Industries and Crown

If you would invest  8,606  in CF Industries Holdings on October 6, 2024 and sell it today you would earn a total of  245.00  from holding CF Industries Holdings or generate 2.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	2.44%
Values	Daily Returns

CF Industries Holdings  vs.  Crown Cork 7375

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.

Crown Cork 7375

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Crown Cork 7375 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Crown is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with CF Industries and Crown

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

The idea behind CF Industries Holdings and Crown Cork 7375 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 Transaction History module to view history of all your transactions and understand their impact on performance.