Correlation Between Yield10 Bioscience and CF Industries

Can any of the company-specific risk be diversified away by investing in both Yield10 Bioscience 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 Yield10 Bioscience and CF Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Yield10 Bioscience and CF Industries Holdings, you can compare the effects of market volatilities on Yield10 Bioscience 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 Yield10 Bioscience with a short position of CF Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yield10 Bioscience and CF Industries.

Diversification Opportunities for Yield10 Bioscience and CF Industries

-0.42

Correlation Coefficient

Yield10 Bioscience  CF Industries

Very good diversification

The 3 months correlation between Yield10 and CF Industries is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Yield10 Bioscience 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 Yield10 Bioscience 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 Yield10 Bioscience 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 Yield10 Bioscience i.e., Yield10 Bioscience and CF Industries go up and down completely randomly.

Pair Corralation between Yield10 Bioscience and CF Industries

Given the investment horizon of 90 days Yield10 Bioscience is expected to generate 3.69 times more return on investment than CF Industries. However, Yield10 Bioscience is 3.69 times more volatile than CF Industries Holdings. It trades about 0.04 of its potential returns per unit of risk. CF Industries Holdings is currently generating about 0.0 per unit of risk. If you would invest  166.00  in Yield10 Bioscience on September 1, 2024 and sell it today you would earn a total of  24.00  from holding Yield10 Bioscience or generate 14.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	31.11%
Values	Daily Returns

Yield10 Bioscience  vs.  CF Industries Holdings

Yield10 Bioscience

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yield10 Bioscience has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Yield10 Bioscience is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

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.

Pair Trading with Yield10 Bioscience and CF Industries

The main advantage of trading using opposite Yield10 Bioscience and CF Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yield10 Bioscience 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 Yield10 Bioscience 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.