Correlation Between CF Industries and LanzaTech Global
Can any of the company-specific risk be diversified away by investing in both CF Industries and LanzaTech Global 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 LanzaTech Global 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 LanzaTech Global, you can compare the effects of market volatilities on CF Industries and LanzaTech Global 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 LanzaTech Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of CF Industries and LanzaTech Global.
Diversification Opportunities for CF Industries and LanzaTech Global
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between CF Industries and LanzaTech is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding CF Industries Holdings and LanzaTech Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LanzaTech Global 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 LanzaTech Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LanzaTech Global has no effect on the direction of CF Industries i.e., CF Industries and LanzaTech Global go up and down completely randomly.
Pair Corralation between CF Industries and LanzaTech Global
Allowing for the 90-day total investment horizon CF Industries is expected to generate 123.36 times less return on investment than LanzaTech Global. But when comparing it to its historical volatility, CF Industries Holdings is 24.92 times less risky than LanzaTech Global. It trades about 0.01 of its potential returns per unit of risk. LanzaTech Global is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 26.00 in LanzaTech Global on November 19, 2024 and sell it today you would lose (6.00) from holding LanzaTech Global or give up 23.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 93.15% |
| Values | Daily Returns |
CF Industries Holdings vs. LanzaTech Global
Performance |
| Timeline |
| CF Industries Holdings |
| LanzaTech Global |
CF Industries and LanzaTech Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CF Industries and LanzaTech Global
The main advantage of trading using opposite CF Industries and LanzaTech Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CF Industries position performs unexpectedly, LanzaTech Global 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 LanzaTech Global will offset losses from the drop in LanzaTech Global's long position.| CF Industries vs. Nutrien | CF Industries vs. Intrepid Potash | CF Industries vs. Corteva | CF Industries vs. ICL Israel Chemicals |
| LanzaTech Global vs. Alphatec Holdings | LanzaTech Global vs. Viemed Healthcare | LanzaTech Global vs. Compania Cervecerias Unidas | LanzaTech Global vs. Aquestive Therapeutics |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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