Correlation Between Allient and CF Industries
Can any of the company-specific risk be diversified away by investing in both Allient 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 Allient and CF Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Allient and CF Industries Holdings, you can compare the effects of market volatilities on Allient 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 Allient with a short position of CF Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allient and CF Industries.
Diversification Opportunities for Allient and CF Industries
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Allient and CF Industries is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Allient 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 Allient 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 Allient 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 Allient i.e., Allient and CF Industries go up and down completely randomly.
Pair Corralation between Allient and CF Industries
Given the investment horizon of 90 days Allient is expected to generate 1.66 times more return on investment than CF Industries. However, Allient is 1.66 times more volatile than CF Industries Holdings. It trades about 0.66 of its potential returns per unit of risk. CF Industries Holdings is currently generating about 0.25 per unit of risk. If you would invest 1,756 in Allient on August 30, 2024 and sell it today you would earn a total of 809.00 from holding Allient or generate 46.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Allient vs. CF Industries Holdings
Performance |
| Timeline |
| Allient |
| CF Industries Holdings |
Allient and CF Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Allient and CF Industries
The main advantage of trading using opposite Allient and CF Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allient 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.| Allient vs. Vicor | Allient vs. LSI Industries | Allient vs. Shenzhen Genvict Technologies | Allient vs. Topsec Technologies Group |
| CF Industries vs. Nutrien | CF Industries vs. Intrepid Potash | CF Industries vs. Corteva | CF Industries vs. ICL Israel Chemicals |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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