Correlation Between Axalta Coating and CF Industries
Can any of the company-specific risk be diversified away by investing in both Axalta Coating 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 Axalta Coating and CF Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Axalta Coating Systems and CF Industries Holdings, you can compare the effects of market volatilities on Axalta Coating 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 Axalta Coating with a short position of CF Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axalta Coating and CF Industries.
Diversification Opportunities for Axalta Coating and CF Industries
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Axalta and CF Industries is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Axalta Coating Systems 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 Axalta Coating 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 Axalta Coating Systems 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 Axalta Coating i.e., Axalta Coating and CF Industries go up and down completely randomly.
Pair Corralation between Axalta Coating and CF Industries
Given the investment horizon of 90 days Axalta Coating is expected to generate 1.14 times less return on investment than CF Industries. But when comparing it to its historical volatility, Axalta Coating Systems is 1.11 times less risky than CF Industries. It trades about 0.05 of its potential returns per unit of risk. CF Industries Holdings is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 6,504 in CF Industries Holdings on August 31, 2024 and sell it today you would earn a total of 2,362 from holding CF Industries Holdings or generate 36.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Axalta Coating Systems vs. CF Industries Holdings
Performance |
| Timeline |
| Axalta Coating Systems |
| CF Industries Holdings |
Axalta Coating and CF Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Axalta Coating and CF Industries
The main advantage of trading using opposite Axalta Coating and CF Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axalta Coating 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.| Axalta Coating vs. Avient Corp | Axalta Coating vs. H B Fuller | Axalta Coating vs. Quaker Chemical | Axalta Coating vs. Cabot |
| 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
Other Complementary Tools
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios |