Correlation Between Pinterest and CF Industries

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Can any of the company-specific risk be diversified away by investing in both Pinterest and CF Industries 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 Pinterest and CF Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pinterest and CF Industries Holdings, you can compare the effects of market volatilities on Pinterest and CF Industries 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 Pinterest with a short position of CF Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pinterest and CF Industries.

Diversification Opportunities for Pinterest and CF Industries

-0.13
  Correlation Coefficient

Good diversification

The 3 months correlation between Pinterest and CF Industries is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Pinterest and CF Industries Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CF Industries Holdings and Pinterest 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 Pinterest are associated (or correlated) with CF Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CF Industries Holdings has no effect on the direction of Pinterest i.e., Pinterest and CF Industries go up and down completely randomly.

Pair Corralation between Pinterest and CF Industries

Given the investment horizon of 90 days Pinterest is expected to under-perform the CF Industries. In addition to that, Pinterest is 1.7 times more volatile than CF Industries Holdings. It trades about -0.05 of its total potential returns per unit of risk. CF Industries Holdings is currently generating about -0.02 per unit of volatility. If you would invest  8,670  in CF Industries Holdings on October 1, 2024 and sell it today you would lose (195.00) from holding CF Industries Holdings or give up 2.25% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Pinterest  vs.  CF Industries Holdings

 Performance 
       Timeline  
Pinterest 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Pinterest 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 stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.
CF Industries Holdings 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days CF Industries Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Pinterest and CF Industries Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Pinterest and CF Industries

The main advantage of trading using opposite Pinterest and CF Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pinterest position performs unexpectedly, CF Industries 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 CF Industries will offset losses from the drop in CF Industries' long position.
The idea behind Pinterest and CF Industries Holdings 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.

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