Correlation Between CF Industries and Awilco Drilling
Can any of the company-specific risk be diversified away by investing in both CF Industries and Awilco Drilling 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 Awilco Drilling 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 Awilco Drilling PLC, you can compare the effects of market volatilities on CF Industries and Awilco Drilling 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 Awilco Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of CF Industries and Awilco Drilling.
Diversification Opportunities for CF Industries and Awilco Drilling
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CF Industries and Awilco is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding CF Industries Holdings and Awilco Drilling PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Awilco Drilling PLC 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 Awilco Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Awilco Drilling PLC has no effect on the direction of CF Industries i.e., CF Industries and Awilco Drilling go up and down completely randomly.
Pair Corralation between CF Industries and Awilco Drilling
Allowing for the 90-day total investment horizon CF Industries is expected to generate 27.04 times less return on investment than Awilco Drilling. But when comparing it to its historical volatility, CF Industries Holdings is 30.38 times less risky than Awilco Drilling. It trades about 0.07 of its potential returns per unit of risk. Awilco Drilling PLC is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,000.00 in Awilco Drilling PLC on August 27, 2024 and sell it today you would lose (808.00) from holding Awilco Drilling PLC or give up 80.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CF Industries Holdings vs. Awilco Drilling PLC
Performance |
| Timeline |
| CF Industries Holdings |
| Awilco Drilling PLC |
CF Industries and Awilco Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CF Industries and Awilco Drilling
The main advantage of trading using opposite CF Industries and Awilco Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CF Industries position performs unexpectedly, Awilco Drilling 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 Awilco Drilling will offset losses from the drop in Awilco Drilling's long position.| CF Industries vs. Nutrien | CF Industries vs. Intrepid Potash | CF Industries vs. Corteva | CF Industries vs. ICL Israel Chemicals |
| Awilco Drilling vs. Noble plc | Awilco Drilling vs. Sinopec Oilfield Service | Awilco Drilling vs. Transocean | Awilco Drilling vs. Helmerich and Payne |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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