Correlation Between Bt Brands and CF Industries
Can any of the company-specific risk be diversified away by investing in both Bt Brands 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 Bt Brands and CF Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bt Brands and CF Industries Holdings, you can compare the effects of market volatilities on Bt Brands 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 Bt Brands with a short position of CF Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bt Brands and CF Industries.
Diversification Opportunities for Bt Brands and CF Industries
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BTBD and CF Industries is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Bt Brands 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 Bt Brands 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 Bt Brands 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 Bt Brands i.e., Bt Brands and CF Industries go up and down completely randomly.
Pair Corralation between Bt Brands and CF Industries
Given the investment horizon of 90 days Bt Brands is expected to generate 3.16 times more return on investment than CF Industries. However, Bt Brands is 3.16 times more volatile than CF Industries Holdings. It trades about 0.02 of its potential returns per unit of risk. CF Industries Holdings is currently generating about 0.02 per unit of risk. If you would invest 194.00 in Bt Brands on September 19, 2024 and sell it today you would lose (30.00) from holding Bt Brands or give up 15.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bt Brands vs. CF Industries Holdings
Performance |
| Timeline |
| Bt Brands |
| CF Industries Holdings |
Bt Brands and CF Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bt Brands and CF Industries
The main advantage of trading using opposite Bt Brands and CF Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bt Brands 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.| Bt Brands vs. Alsea SAB de | Bt Brands vs. Marstons PLC | Bt Brands vs. Bagger Daves Burger | Bt Brands vs. Marstons PLC |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
Other Complementary Tools
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets |