Correlation Between CF Industries and Vindicator Silver

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

Diversification Opportunities for CF Industries and Vindicator Silver

-0.29

Correlation Coefficient

CF Industries  Vindicator Silver

Very good diversification

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

Pair Corralation between CF Industries and Vindicator Silver

Allowing for the 90-day total investment horizon CF Industries Holdings is expected to generate 0.39 times more return on investment than Vindicator Silver. However, CF Industries Holdings is 2.6 times less risky than Vindicator Silver. It trades about -0.01 of its potential returns per unit of risk. Vindicator Silver Lead Mining is currently generating about -0.22 per unit of risk. If you would invest  8,738  in CF Industries Holdings on September 18, 2024 and sell it today you would lose (70.00) from holding CF Industries Holdings or give up 0.8% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

CF Industries Holdings  vs.  Vindicator Silver Lead Mining

CF Industries Holdings

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CF Industries Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, CF Industries may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Vindicator Silver Lead

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vindicator Silver Lead Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with CF Industries and Vindicator Silver

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

The idea behind CF Industries Holdings and Vindicator Silver Lead Mining 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.