Correlation Between CF Industries and LuxUrban Hotels
Can any of the company-specific risk be diversified away by investing in both CF Industries and LuxUrban Hotels 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 LuxUrban Hotels 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 LuxUrban Hotels 1300, you can compare the effects of market volatilities on CF Industries and LuxUrban Hotels 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 LuxUrban Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of CF Industries and LuxUrban Hotels.
Diversification Opportunities for CF Industries and LuxUrban Hotels
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between CF Industries and LuxUrban is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding CF Industries Holdings and LuxUrban Hotels 1300 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LuxUrban Hotels 1300 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 LuxUrban Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LuxUrban Hotels 1300 has no effect on the direction of CF Industries i.e., CF Industries and LuxUrban Hotels go up and down completely randomly.
Pair Corralation between CF Industries and LuxUrban Hotels
Allowing for the 90-day total investment horizon CF Industries Holdings is expected to generate 0.29 times more return on investment than LuxUrban Hotels. However, CF Industries Holdings is 3.46 times less risky than LuxUrban Hotels. It trades about 0.15 of its potential returns per unit of risk. LuxUrban Hotels 1300 is currently generating about -0.37 per unit of risk. If you would invest 8,403 in CF Industries Holdings on October 30, 2024 and sell it today you would earn a total of 656.00 from holding CF Industries Holdings or generate 7.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 73.68% |
| Values | Daily Returns |
CF Industries Holdings vs. LuxUrban Hotels 1300
Performance |
| Timeline |
| CF Industries Holdings |
| LuxUrban Hotels 1300 |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
CF Industries and LuxUrban Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CF Industries and LuxUrban Hotels
The main advantage of trading using opposite CF Industries and LuxUrban Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CF Industries position performs unexpectedly, LuxUrban Hotels 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 LuxUrban Hotels will offset losses from the drop in LuxUrban Hotels' long position.| CF Industries vs. Nutrien | CF Industries vs. Intrepid Potash | CF Industries vs. Corteva | CF Industries vs. ICL Israel Chemicals |
| LuxUrban Hotels vs. Lendlease Global Commercial | LuxUrban Hotels vs. Net Lease Office | LuxUrban Hotels vs. BRP Inc | LuxUrban Hotels vs. Modine Manufacturing |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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