Correlation Between CF Industries and Spring Valley
Can any of the company-specific risk be diversified away by investing in both CF Industries and Spring Valley 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 Spring Valley 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 Spring Valley Acquisition, you can compare the effects of market volatilities on CF Industries and Spring Valley 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 Spring Valley. Check out your portfolio center. Please also check ongoing floating volatility patterns of CF Industries and Spring Valley.
Diversification Opportunities for CF Industries and Spring Valley
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between CF Industries and Spring is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding CF Industries Holdings and Spring Valley Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spring Valley Acquisition 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 Spring Valley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spring Valley Acquisition has no effect on the direction of CF Industries i.e., CF Industries and Spring Valley go up and down completely randomly.
Pair Corralation between CF Industries and Spring Valley
Allowing for the 90-day total investment horizon CF Industries is expected to generate 3.52 times less return on investment than Spring Valley. But when comparing it to its historical volatility, CF Industries Holdings is 4.67 times less risky than Spring Valley. It trades about 0.37 of its potential returns per unit of risk. Spring Valley Acquisition is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 7.03 in Spring Valley Acquisition on October 20, 2024 and sell it today you would earn a total of 1.97 from holding Spring Valley Acquisition or generate 28.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 55.0% |
| Values | Daily Returns |
CF Industries Holdings vs. Spring Valley Acquisition
Performance |
| Timeline |
| CF Industries Holdings |
| Spring Valley Acquisition |
CF Industries and Spring Valley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CF Industries and Spring Valley
The main advantage of trading using opposite CF Industries and Spring Valley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CF Industries position performs unexpectedly, Spring Valley 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 Spring Valley will offset losses from the drop in Spring Valley's long position.| CF Industries vs. Nutrien | CF Industries vs. Intrepid Potash | CF Industries vs. Corteva | CF Industries vs. ICL Israel Chemicals |
| Spring Valley vs. VF Corporation | Spring Valley vs. Kontoor Brands | Spring Valley vs. BW Offshore Limited | Spring Valley vs. NetSol Technologies |
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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
Other Complementary Tools
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios |