Correlation Between CF Industries and Global Net
Can any of the company-specific risk be diversified away by investing in both CF Industries and Global Net 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 Global Net 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 Global Net Lease, you can compare the effects of market volatilities on CF Industries and Global Net 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 Global Net. Check out your portfolio center. Please also check ongoing floating volatility patterns of CF Industries and Global Net.
Diversification Opportunities for CF Industries and Global Net
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CF Industries and Global is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding CF Industries Holdings and Global Net Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Net Lease 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 Global Net. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Net Lease has no effect on the direction of CF Industries i.e., CF Industries and Global Net go up and down completely randomly.
Pair Corralation between CF Industries and Global Net
Allowing for the 90-day total investment horizon CF Industries Holdings is expected to generate 1.66 times more return on investment than Global Net. However, CF Industries is 1.66 times more volatile than Global Net Lease. It trades about 0.18 of its potential returns per unit of risk. Global Net Lease is currently generating about -0.02 per unit of risk. If you would invest 8,458 in CF Industries Holdings on September 12, 2024 and sell it today you would earn a total of 526.00 from holding CF Industries Holdings or generate 6.22% 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. Global Net Lease
Performance |
| Timeline |
| CF Industries Holdings |
| Global Net Lease |
CF Industries and Global Net Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CF Industries and Global Net
The main advantage of trading using opposite CF Industries and Global Net positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CF Industries position performs unexpectedly, Global Net 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 Global Net will offset losses from the drop in Global Net's long position.| CF Industries vs. Nutrien | CF Industries vs. Intrepid Potash | CF Industries vs. Corteva | CF Industries vs. ICL Israel Chemicals |
| Global Net vs. Triton International Limited | Global Net vs. BBB Foods | Global Net vs. Avis Budget Group | Global Net vs. Bridgford Foods |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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