Correlation Between CF Industries and Forsys Metals
Can any of the company-specific risk be diversified away by investing in both CF Industries and Forsys Metals 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 Forsys Metals 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 Forsys Metals Corp, you can compare the effects of market volatilities on CF Industries and Forsys Metals 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 Forsys Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of CF Industries and Forsys Metals.
Diversification Opportunities for CF Industries and Forsys Metals
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CF Industries and Forsys is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding CF Industries Holdings and Forsys Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Forsys Metals 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 Forsys Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Forsys Metals Corp has no effect on the direction of CF Industries i.e., CF Industries and Forsys Metals go up and down completely randomly.
Pair Corralation between CF Industries and Forsys Metals
Allowing for the 90-day total investment horizon CF Industries is expected to generate 1.67 times less return on investment than Forsys Metals. But when comparing it to its historical volatility, CF Industries Holdings is 1.87 times less risky than Forsys Metals. It trades about 0.21 of its potential returns per unit of risk. Forsys Metals Corp is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 42.00 in Forsys Metals Corp on September 13, 2024 and sell it today you would earn a total of 5.00 from holding Forsys Metals Corp or generate 11.9% 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. Forsys Metals Corp
Performance |
| Timeline |
| CF Industries Holdings |
| Forsys Metals Corp |
CF Industries and Forsys Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CF Industries and Forsys Metals
The main advantage of trading using opposite CF Industries and Forsys Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CF Industries position performs unexpectedly, Forsys Metals 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 Forsys Metals will offset losses from the drop in Forsys Metals' long position.| CF Industries vs. Intrepid Potash | CF Industries vs. Corteva | CF Industries vs. ICL Israel Chemicals | CF Industries vs. The Mosaic |
| Forsys Metals vs. POSCO Holdings | Forsys Metals vs. Schweizerische Nationalbank | Forsys Metals vs. Berkshire Hathaway | Forsys Metals vs. Berkshire Hathaway |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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