Correlation Between CF Industries and Suburban Propane
Can any of the company-specific risk be diversified away by investing in both CF Industries and Suburban Propane 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 Suburban Propane 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 Suburban Propane Partners, you can compare the effects of market volatilities on CF Industries and Suburban Propane 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 Suburban Propane. Check out your portfolio center. Please also check ongoing floating volatility patterns of CF Industries and Suburban Propane.
Diversification Opportunities for CF Industries and Suburban Propane
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CF Industries and Suburban is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding CF Industries Holdings and Suburban Propane Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suburban Propane Partners 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 Suburban Propane. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suburban Propane Partners has no effect on the direction of CF Industries i.e., CF Industries and Suburban Propane go up and down completely randomly.
Pair Corralation between CF Industries and Suburban Propane
Allowing for the 90-day total investment horizon CF Industries Holdings is expected to generate 0.98 times more return on investment than Suburban Propane. However, CF Industries Holdings is 1.02 times less risky than Suburban Propane. It trades about 0.06 of its potential returns per unit of risk. Suburban Propane Partners is currently generating about 0.02 per unit of risk. If you would invest 7,957 in CF Industries Holdings on September 1, 2024 and sell it today you would earn a total of 1,009 from holding CF Industries Holdings or generate 12.68% 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. Suburban Propane Partners
Performance |
| Timeline |
| CF Industries Holdings |
| Suburban Propane Partners |
CF Industries and Suburban Propane Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CF Industries and Suburban Propane
The main advantage of trading using opposite CF Industries and Suburban Propane positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CF Industries position performs unexpectedly, Suburban Propane 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 Suburban Propane will offset losses from the drop in Suburban Propane's long position.| CF Industries vs. Nutrien | CF Industries vs. Intrepid Potash | CF Industries vs. Corteva | CF Industries vs. ICL Israel Chemicals |
| Suburban Propane vs. Northwest Natural Gas | Suburban Propane vs. Atmos Energy | Suburban Propane vs. One Gas | Suburban Propane vs. NiSource |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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