Correlation Between CF Industries and KVH Industries
Can any of the company-specific risk be diversified away by investing in both CF Industries and KVH Industries 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 KVH Industries 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 KVH Industries, you can compare the effects of market volatilities on CF Industries and KVH Industries 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 KVH Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of CF Industries and KVH Industries.
Diversification Opportunities for CF Industries and KVH Industries
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CF Industries and KVH is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding CF Industries Holdings and KVH Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KVH Industries 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 KVH Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KVH Industries has no effect on the direction of CF Industries i.e., CF Industries and KVH Industries go up and down completely randomly.
Pair Corralation between CF Industries and KVH Industries
Allowing for the 90-day total investment horizon CF Industries is expected to generate 1.75 times less return on investment than KVH Industries. But when comparing it to its historical volatility, CF Industries Holdings is 1.19 times less risky than KVH Industries. It trades about 0.27 of its potential returns per unit of risk. KVH Industries is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest 464.00 in KVH Industries on August 31, 2024 and sell it today you would earn a total of 87.00 from holding KVH Industries or generate 18.75% 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. KVH Industries
Performance |
| Timeline |
| CF Industries Holdings |
| KVH Industries |
CF Industries and KVH Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CF Industries and KVH Industries
The main advantage of trading using opposite CF Industries and KVH Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CF Industries position performs unexpectedly, KVH Industries 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 KVH Industries will offset losses from the drop in KVH Industries' long position.| CF Industries vs. Nutrien | CF Industries vs. Intrepid Potash | CF Industries vs. Corteva | CF Industries vs. ICL Israel Chemicals |
| KVH Industries vs. Telesat Corp | KVH Industries vs. Comtech Telecommunications Corp | KVH Industries vs. Knowles Cor | KVH Industries vs. Ituran Location and |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
Other Complementary Tools
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges |