Correlation Between CF Industries and ESH Acquisition
Can any of the company-specific risk be diversified away by investing in both CF Industries and ESH Acquisition 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 ESH Acquisition 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 ESH Acquisition Corp, you can compare the effects of market volatilities on CF Industries and ESH Acquisition 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 ESH Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of CF Industries and ESH Acquisition.
Diversification Opportunities for CF Industries and ESH Acquisition
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between CF Industries and ESH is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding CF Industries Holdings and ESH Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ESH Acquisition Corp 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 ESH Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ESH Acquisition Corp has no effect on the direction of CF Industries i.e., CF Industries and ESH Acquisition go up and down completely randomly.
Pair Corralation between CF Industries and ESH Acquisition
Allowing for the 90-day total investment horizon CF Industries Holdings is expected to generate 1.16 times more return on investment than ESH Acquisition. However, CF Industries is 1.16 times more volatile than ESH Acquisition Corp. It trades about 0.23 of its potential returns per unit of risk. ESH Acquisition Corp is currently generating about -0.26 per unit of risk. If you would invest 8,540 in CF Industries Holdings on October 25, 2024 and sell it today you would earn a total of 811.00 from holding CF Industries Holdings or generate 9.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CF Industries Holdings vs. ESH Acquisition Corp
Performance |
| Timeline |
| CF Industries Holdings |
| ESH Acquisition Corp |
CF Industries and ESH Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CF Industries and ESH Acquisition
The main advantage of trading using opposite CF Industries and ESH Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CF Industries position performs unexpectedly, ESH Acquisition 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 ESH Acquisition will offset losses from the drop in ESH Acquisition's long position.| CF Industries vs. Nutrien | CF Industries vs. Intrepid Potash | CF Industries vs. Corteva | CF Industries vs. ICL Israel Chemicals |
| ESH Acquisition vs. Sphere Entertainment Co | ESH Acquisition vs. Robix Environmental Technologies | ESH Acquisition vs. Zhihu Inc ADR | ESH Acquisition vs. KVH Industries |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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