Correlation Between CF Industries and Valhi
Can any of the company-specific risk be diversified away by investing in both CF Industries and Valhi 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 Valhi 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 Valhi Inc, you can compare the effects of market volatilities on CF Industries and Valhi 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 Valhi. Check out your portfolio center. Please also check ongoing floating volatility patterns of CF Industries and Valhi.
Diversification Opportunities for CF Industries and Valhi
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between CF Industries and Valhi is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding CF Industries Holdings and Valhi Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valhi Inc 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 Valhi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valhi Inc has no effect on the direction of CF Industries i.e., CF Industries and Valhi go up and down completely randomly.
Pair Corralation between CF Industries and Valhi
Allowing for the 90-day total investment horizon CF Industries Holdings is expected to generate 0.97 times more return on investment than Valhi. However, CF Industries Holdings is 1.03 times less risky than Valhi. It trades about 0.06 of its potential returns per unit of risk. Valhi Inc is currently generating about -0.14 per unit of risk. If you would invest 8,976 in CF Industries Holdings on November 5, 2024 and sell it today you would earn a total of 245.00 from holding CF Industries Holdings or generate 2.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CF Industries Holdings vs. Valhi Inc
Performance |
| Timeline |
| CF Industries Holdings |
| Valhi Inc |
CF Industries and Valhi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CF Industries and Valhi
The main advantage of trading using opposite CF Industries and Valhi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CF Industries position performs unexpectedly, Valhi 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 Valhi will offset losses from the drop in Valhi's long position.| CF Industries vs. Nutrien | CF Industries vs. Intrepid Potash | CF Industries vs. Corteva | CF Industries vs. ICL Israel Chemicals |
| Valhi vs. Huntsman | Valhi vs. Lsb Industries | Valhi vs. Westlake Chemical Partners | Valhi vs. Green Plains Renewable |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
Other Complementary Tools
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format |