Correlation Between INTNED and CF Industries

Can any of the company-specific risk be diversified away by investing in both INTNED 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 INTNED and CF Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between INTNED 65 and CF Industries Holdings, you can compare the effects of market volatilities on INTNED 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 INTNED with a short position of CF Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of INTNED and CF Industries.

Diversification Opportunities for INTNED and CF Industries

0.29

Correlation Coefficient

INTNED  CF Industries

Modest diversification

The 3 months correlation between INTNED and CF Industries is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding INTNED 65 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 INTNED 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 INTNED 65 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 INTNED i.e., INTNED and CF Industries go up and down completely randomly.

Pair Corralation between INTNED and CF Industries

Assuming the 90 days trading horizon INTNED 65 is expected to under-perform the CF Industries. But the bond apears to be less risky and, when comparing its historical volatility, INTNED 65 is 2.51 times less risky than CF Industries. The bond trades about -0.24 of its potential returns per unit of risk. The CF Industries Holdings is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  8,457  in CF Industries Holdings on December 25, 2024 and sell it today you would lose (774.00) from holding CF Industries Holdings or give up 9.15% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	50.85%
Values	Daily Returns

INTNED 65  vs.  CF Industries Holdings

INTNED 65

Risk-Adjusted Performance

Very Weak

Over the last 90 days INTNED 65 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for INTNED 65 investors.

CF Industries Holdings

Risk-Adjusted Performance

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 latest weak performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with INTNED and CF Industries

The main advantage of trading using opposite INTNED and CF Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INTNED 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 INTNED 65 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.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.