Correlation Between CF Industries and 07786DAA4

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Can any of the company-specific risk be diversified away by investing in both CF Industries and 07786DAA4 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 07786DAA4 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 BELL ATLANTIC PENNSYLVANIA INC, you can compare the effects of market volatilities on CF Industries and 07786DAA4 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 07786DAA4. Check out your portfolio center. Please also check ongoing floating volatility patterns of CF Industries and 07786DAA4.

Diversification Opportunities for CF Industries and 07786DAA4

-0.15
  Correlation Coefficient

Good diversification

The 3 months correlation between CF Industries and 07786DAA4 is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding CF Industries Holdings and BELL ATLANTIC PENNSYLVANIA INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BELL ATLANTIC PENNSY 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 07786DAA4. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BELL ATLANTIC PENNSY has no effect on the direction of CF Industries i.e., CF Industries and 07786DAA4 go up and down completely randomly.

Pair Corralation between CF Industries and 07786DAA4

Allowing for the 90-day total investment horizon CF Industries Holdings is expected to generate 1.08 times more return on investment than 07786DAA4. However, CF Industries is 1.08 times more volatile than BELL ATLANTIC PENNSYLVANIA INC. It trades about 0.15 of its potential returns per unit of risk. BELL ATLANTIC PENNSYLVANIA INC is currently generating about 0.0 per unit of risk. If you would invest  8,524  in CF Industries Holdings on September 15, 2024 and sell it today you would earn a total of  426.00  from holding CF Industries Holdings or generate 5.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy57.14%
ValuesDaily Returns

CF Industries Holdings  vs.  BELL ATLANTIC PENNSYLVANIA INC

 Performance 
       Timeline  
CF Industries Holdings 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in CF Industries Holdings are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, CF Industries reported solid returns over the last few months and may actually be approaching a breakup point.
BELL ATLANTIC PENNSY 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days BELL ATLANTIC PENNSYLVANIA INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 07786DAA4 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

CF Industries and 07786DAA4 Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with CF Industries and 07786DAA4

The main advantage of trading using opposite CF Industries and 07786DAA4 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CF Industries position performs unexpectedly, 07786DAA4 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 07786DAA4 will offset losses from the drop in 07786DAA4's long position.
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The idea behind CF Industries Holdings and BELL ATLANTIC PENNSYLVANIA INC 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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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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