Correlation Between CF Industries and Zapata Computing
Can any of the company-specific risk be diversified away by investing in both CF Industries and Zapata Computing 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 Zapata Computing 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 Zapata Computing Holdings, you can compare the effects of market volatilities on CF Industries and Zapata Computing 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 Zapata Computing. Check out your portfolio center. Please also check ongoing floating volatility patterns of CF Industries and Zapata Computing.
Diversification Opportunities for CF Industries and Zapata Computing
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between CF Industries and Zapata is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding CF Industries Holdings and Zapata Computing Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zapata Computing Holdings 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 Zapata Computing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zapata Computing Holdings has no effect on the direction of CF Industries i.e., CF Industries and Zapata Computing go up and down completely randomly.
Pair Corralation between CF Industries and Zapata Computing
Allowing for the 90-day total investment horizon CF Industries Holdings is expected to generate 0.15 times more return on investment than Zapata Computing. However, CF Industries Holdings is 6.65 times less risky than Zapata Computing. It trades about 0.06 of its potential returns per unit of risk. Zapata Computing Holdings is currently generating about -0.18 per unit of risk. If you would invest 7,201 in CF Industries Holdings on August 29, 2024 and sell it today you would earn a total of 1,613 from holding CF Industries Holdings or generate 22.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 93.55% |
| Values | Daily Returns |
CF Industries Holdings vs. Zapata Computing Holdings
Performance |
| Timeline |
| CF Industries Holdings |
| Zapata Computing Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
CF Industries and Zapata Computing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CF Industries and Zapata Computing
The main advantage of trading using opposite CF Industries and Zapata Computing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CF Industries position performs unexpectedly, Zapata Computing 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 Zapata Computing will offset losses from the drop in Zapata Computing's long position.The idea behind CF Industries Holdings and Zapata Computing Holdings 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.| Zapata Computing vs. Dennys Corp | Zapata Computing vs. Dominos Pizza | Zapata Computing vs. Cracker Barrel Old | Zapata Computing vs. CF Industries Holdings |
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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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