Correlation Between CF Industries and Iris Energy
Can any of the company-specific risk be diversified away by investing in both CF Industries and Iris Energy 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 Iris Energy 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 Iris Energy, you can compare the effects of market volatilities on CF Industries and Iris Energy 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 Iris Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of CF Industries and Iris Energy.
Diversification Opportunities for CF Industries and Iris Energy
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CF Industries and Iris is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding CF Industries Holdings and Iris Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iris Energy 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 Iris Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iris Energy has no effect on the direction of CF Industries i.e., CF Industries and Iris Energy go up and down completely randomly.
Pair Corralation between CF Industries and Iris Energy
Allowing for the 90-day total investment horizon CF Industries is expected to generate 2.08 times less return on investment than Iris Energy. But when comparing it to its historical volatility, CF Industries Holdings is 5.69 times less risky than Iris Energy. It trades about 0.22 of its potential returns per unit of risk. Iris Energy is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,240 in Iris Energy on September 13, 2024 and sell it today you would earn a total of 103.00 from holding Iris Energy or generate 8.31% 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. Iris Energy
Performance |
| Timeline |
| CF Industries Holdings |
| Iris Energy |
CF Industries and Iris Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CF Industries and Iris Energy
The main advantage of trading using opposite CF Industries and Iris Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CF Industries position performs unexpectedly, Iris Energy 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 Iris Energy will offset losses from the drop in Iris Energy's long position.| CF Industries vs. Intrepid Potash | CF Industries vs. Corteva | CF Industries vs. ICL Israel Chemicals | CF Industries vs. The Mosaic |
| Iris Energy vs. EvoAir Holdings | Iris Energy vs. Siriuspoint | Iris Energy vs. AerSale Corp | Iris Energy vs. NI 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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