Correlation Between CF Industries and Canlan Ice
Can any of the company-specific risk be diversified away by investing in both CF Industries and Canlan Ice 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 Canlan Ice 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 Canlan Ice Sports, you can compare the effects of market volatilities on CF Industries and Canlan Ice 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 Canlan Ice. Check out your portfolio center. Please also check ongoing floating volatility patterns of CF Industries and Canlan Ice.
Diversification Opportunities for CF Industries and Canlan Ice
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CF Industries and Canlan is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding CF Industries Holdings and Canlan Ice Sports in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canlan Ice Sports 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 Canlan Ice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canlan Ice Sports has no effect on the direction of CF Industries i.e., CF Industries and Canlan Ice go up and down completely randomly.
Pair Corralation between CF Industries and Canlan Ice
Allowing for the 90-day total investment horizon CF Industries is expected to generate 1.96 times less return on investment than Canlan Ice. In addition to that, CF Industries is 17.64 times more volatile than Canlan Ice Sports. It trades about 0.0 of its total potential returns per unit of risk. Canlan Ice Sports is currently generating about 0.13 per unit of volatility. If you would invest 277.00 in Canlan Ice Sports on September 2, 2024 and sell it today you would earn a total of 20.00 from holding Canlan Ice Sports or generate 7.22% 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. Canlan Ice Sports
Performance |
| Timeline |
| CF Industries Holdings |
| Canlan Ice Sports |
CF Industries and Canlan Ice Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CF Industries and Canlan Ice
The main advantage of trading using opposite CF Industries and Canlan Ice positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CF Industries position performs unexpectedly, Canlan Ice 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 Canlan Ice will offset losses from the drop in Canlan Ice's long position.| CF Industries vs. Nutrien | CF Industries vs. Intrepid Potash | CF Industries vs. Corteva | CF Industries vs. ICL Israel Chemicals |
| Canlan Ice vs. Kite Realty Group | Canlan Ice vs. Alaska Air Group | Canlan Ice vs. Stepstone Group | Canlan Ice vs. Tencent Music Entertainment |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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