Correlation Between CF Industries and Citizens Financial
Can any of the company-specific risk be diversified away by investing in both CF Industries and Citizens Financial 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 Citizens Financial 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 Citizens Financial Group,, you can compare the effects of market volatilities on CF Industries and Citizens Financial 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 Citizens Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of CF Industries and Citizens Financial.
Diversification Opportunities for CF Industries and Citizens Financial
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CF Industries and Citizens is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding CF Industries Holdings and Citizens Financial Group, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citizens Financial Group, 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 Citizens Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citizens Financial Group, has no effect on the direction of CF Industries i.e., CF Industries and Citizens Financial go up and down completely randomly.
Pair Corralation between CF Industries and Citizens Financial
Allowing for the 90-day total investment horizon CF Industries Holdings is expected to generate 3.3 times more return on investment than Citizens Financial. However, CF Industries is 3.3 times more volatile than Citizens Financial Group,. It trades about 0.21 of its potential returns per unit of risk. Citizens Financial Group, is currently generating about 0.11 per unit of risk. If you would invest 8,357 in CF Industries Holdings on September 2, 2024 and sell it today you would earn a total of 609.00 from holding CF Industries Holdings or generate 7.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CF Industries Holdings vs. Citizens Financial Group,
Performance |
| Timeline |
| CF Industries Holdings |
| Citizens Financial Group, |
CF Industries and Citizens Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CF Industries and Citizens Financial
The main advantage of trading using opposite CF Industries and Citizens Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CF Industries position performs unexpectedly, Citizens Financial 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 Citizens Financial will offset losses from the drop in Citizens Financial's long position.| CF Industries vs. Nutrien | CF Industries vs. Intrepid Potash | CF Industries vs. Corteva | CF Industries vs. ICL Israel Chemicals |
| Citizens Financial vs. Canlan Ice Sports | Citizens Financial vs. Origin Materials | Citizens Financial vs. Eastman Chemical | Citizens Financial vs. CF Industries Holdings |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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