Correlation Between CF Industries and AUTODESK

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Can any of the company-specific risk be diversified away by investing in both CF Industries and AUTODESK 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 AUTODESK 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 AUTODESK INC 35, you can compare the effects of market volatilities on CF Industries and AUTODESK 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 AUTODESK. Check out your portfolio center. Please also check ongoing floating volatility patterns of CF Industries and AUTODESK.

Diversification Opportunities for CF Industries and AUTODESK

-0.58
  Correlation Coefficient

Excellent diversification

The 3 months correlation between CF Industries and AUTODESK is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding CF Industries Holdings and AUTODESK INC 35 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AUTODESK INC 35 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 AUTODESK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AUTODESK INC 35 has no effect on the direction of CF Industries i.e., CF Industries and AUTODESK go up and down completely randomly.

Pair Corralation between CF Industries and AUTODESK

Allowing for the 90-day total investment horizon CF Industries Holdings is expected to generate 1.82 times more return on investment than AUTODESK. However, CF Industries is 1.82 times more volatile than AUTODESK INC 35. It trades about 0.22 of its potential returns per unit of risk. AUTODESK INC 35 is currently generating about -0.2 per unit of risk. If you would invest  8,373  in CF Industries Holdings on September 13, 2024 and sell it today you would earn a total of  638.50  from holding CF Industries Holdings or generate 7.63% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy90.91%
ValuesDaily Returns

CF Industries Holdings  vs.  AUTODESK INC 35

 Performance 
       Timeline  
CF Industries Holdings 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in CF Industries Holdings are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent technical and fundamental indicators, CF Industries reported solid returns over the last few months and may actually be approaching a breakup point.
AUTODESK INC 35 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days AUTODESK INC 35 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, AUTODESK is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

CF Industries and AUTODESK Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with CF Industries and AUTODESK

The main advantage of trading using opposite CF Industries and AUTODESK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CF Industries position performs unexpectedly, AUTODESK 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 AUTODESK will offset losses from the drop in AUTODESK's long position.
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The idea behind CF Industries Holdings and AUTODESK INC 35 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.

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