Correlation Between CF Industries and 23291KAH8

Can any of the company-specific risk be diversified away by investing in both CF Industries and 23291KAH8 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 23291KAH8 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 DH EUROPE FINANCE, you can compare the effects of market volatilities on CF Industries and 23291KAH8 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 23291KAH8. Check out your portfolio center. Please also check ongoing floating volatility patterns of CF Industries and 23291KAH8.

Diversification Opportunities for CF Industries and 23291KAH8

-0.29

Correlation Coefficient

CF Industries  23291KAH8

Very good diversification

The 3 months correlation between CF Industries and 23291KAH8 is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding CF Industries Holdings and DH EUROPE FINANCE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DH EUROPE FINANCE 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 23291KAH8. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DH EUROPE FINANCE has no effect on the direction of CF Industries i.e., CF Industries and 23291KAH8 go up and down completely randomly.

Pair Corralation between CF Industries and 23291KAH8

Allowing for the 90-day total investment horizon CF Industries Holdings is expected to generate 5.35 times more return on investment than 23291KAH8. However, CF Industries is 5.35 times more volatile than DH EUROPE FINANCE. It trades about 0.14 of its potential returns per unit of risk. DH EUROPE FINANCE is currently generating about -0.14 per unit of risk. If you would invest  8,368  in CF Industries Holdings on October 23, 2024 and sell it today you would earn a total of  1,333  from holding CF Industries Holdings or generate 15.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

CF Industries Holdings  vs.  DH EUROPE FINANCE

CF Industries Holdings

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CF Industries Holdings are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, CF Industries reported solid returns over the last few months and may actually be approaching a breakup point.

DH EUROPE FINANCE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DH EUROPE FINANCE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 23291KAH8 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with CF Industries and 23291KAH8

The main advantage of trading using opposite CF Industries and 23291KAH8 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CF Industries position performs unexpectedly, 23291KAH8 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 23291KAH8 will offset losses from the drop in 23291KAH8's long position.

The idea behind CF Industries Holdings and DH EUROPE FINANCE 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.