Correlation Between CF Industries and PennantPark Floating
Can any of the company-specific risk be diversified away by investing in both CF Industries and PennantPark Floating 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 PennantPark Floating 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 PennantPark Floating Rate, you can compare the effects of market volatilities on CF Industries and PennantPark Floating 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 PennantPark Floating. Check out your portfolio center. Please also check ongoing floating volatility patterns of CF Industries and PennantPark Floating.
Diversification Opportunities for CF Industries and PennantPark Floating
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between CF Industries and PennantPark is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding CF Industries Holdings and PennantPark Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PennantPark Floating Rate 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 PennantPark Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PennantPark Floating Rate has no effect on the direction of CF Industries i.e., CF Industries and PennantPark Floating go up and down completely randomly.
Pair Corralation between CF Industries and PennantPark Floating
Allowing for the 90-day total investment horizon CF Industries is expected to generate 9.58 times less return on investment than PennantPark Floating. In addition to that, CF Industries is 1.38 times more volatile than PennantPark Floating Rate. It trades about 0.0 of its total potential returns per unit of risk. PennantPark Floating Rate is currently generating about 0.04 per unit of volatility. If you would invest 915.00 in PennantPark Floating Rate on August 30, 2024 and sell it today you would earn a total of 192.00 from holding PennantPark Floating Rate or generate 20.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CF Industries Holdings vs. PennantPark Floating Rate
Performance |
| Timeline |
| CF Industries Holdings |
| PennantPark Floating Rate |
CF Industries and PennantPark Floating Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CF Industries and PennantPark Floating
The main advantage of trading using opposite CF Industries and PennantPark Floating positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CF Industries position performs unexpectedly, PennantPark Floating 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 PennantPark Floating will offset losses from the drop in PennantPark Floating's long position.| CF Industries vs. Nutrien | CF Industries vs. Intrepid Potash | CF Industries vs. Corteva | CF Industries vs. FMC Corporation |
| PennantPark Floating vs. TPG Inc | PennantPark Floating vs. Carlyle Secured Lending | PennantPark Floating vs. Brookfield Corp |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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