Correlation Between CF Industries and Montana Technologies
Can any of the company-specific risk be diversified away by investing in both CF Industries and Montana Technologies 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 CF Industries and Montana Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CF Industries Holdings and Montana Technologies, you can compare the effects of market volatilities on CF Industries and Montana Technologies 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 CF Industries with a short position of Montana Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of CF Industries and Montana Technologies.
Diversification Opportunities for CF Industries and Montana Technologies
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CF Industries and Montana is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding CF Industries Holdings and Montana Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Montana Technologies and CF Industries 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 CF Industries Holdings are associated (or correlated) with Montana Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Montana Technologies has no effect on the direction of CF Industries i.e., CF Industries and Montana Technologies go up and down completely randomly.
Pair Corralation between CF Industries and Montana Technologies
Allowing for the 90-day total investment horizon CF Industries is expected to generate 4.77 times less return on investment than Montana Technologies. But when comparing it to its historical volatility, CF Industries Holdings is 1.92 times less risky than Montana Technologies. It trades about 0.18 of its potential returns per unit of risk. Montana Technologies is currently generating about 0.45 of returns per unit of risk over similar time horizon. If you would invest 666.00 in Montana Technologies on September 14, 2024 and sell it today you would earn a total of 216.00 from holding Montana Technologies or generate 32.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CF Industries Holdings vs. Montana Technologies
Performance |
| Timeline |
| CF Industries Holdings |
| Montana Technologies |
CF Industries and Montana Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CF Industries and Montana Technologies
The main advantage of trading using opposite CF Industries and Montana Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CF Industries position performs unexpectedly, Montana Technologies 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 Montana Technologies will offset losses from the drop in Montana Technologies' long position.| CF Industries vs. Intrepid Potash | CF Industries vs. Corteva | CF Industries vs. ICL Israel Chemicals | CF Industries vs. The Mosaic |
| Montana Technologies vs. CF Industries Holdings | Montana Technologies vs. Grupo Televisa SAB | Montana Technologies vs. Western Digital | Montana Technologies vs. Pinterest |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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