Correlation Between CFI Holding and Beta ETF

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Can any of the company-specific risk be diversified away by investing in both CFI Holding and Beta ETF 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 CFI Holding and Beta ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CFI Holding SA and Beta ETF Nasdaq 100, you can compare the effects of market volatilities on CFI Holding and Beta ETF 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 CFI Holding with a short position of Beta ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of CFI Holding and Beta ETF.

Diversification Opportunities for CFI Holding and Beta ETF

-0.31
  Correlation Coefficient

Very good diversification

The 3 months correlation between CFI and Beta is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding CFI Holding SA and Beta ETF Nasdaq 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beta ETF Nasdaq and CFI Holding 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 CFI Holding SA are associated (or correlated) with Beta ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beta ETF Nasdaq has no effect on the direction of CFI Holding i.e., CFI Holding and Beta ETF go up and down completely randomly.

Pair Corralation between CFI Holding and Beta ETF

Assuming the 90 days trading horizon CFI Holding SA is expected to under-perform the Beta ETF. In addition to that, CFI Holding is 2.21 times more volatile than Beta ETF Nasdaq 100. It trades about -0.08 of its total potential returns per unit of risk. Beta ETF Nasdaq 100 is currently generating about 0.21 per unit of volatility. If you would invest  85,700  in Beta ETF Nasdaq 100 on September 1, 2024 and sell it today you would earn a total of  11,320  from holding Beta ETF Nasdaq 100 or generate 13.21% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

CFI Holding SA  vs.  Beta ETF Nasdaq 100

 Performance 
       Timeline  
CFI Holding SA 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days CFI Holding SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in December 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.
Beta ETF Nasdaq 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Beta ETF Nasdaq 100 are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Beta ETF sustained solid returns over the last few months and may actually be approaching a breakup point.

CFI Holding and Beta ETF Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with CFI Holding and Beta ETF

The main advantage of trading using opposite CFI Holding and Beta ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CFI Holding position performs unexpectedly, Beta ETF 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 Beta ETF will offset losses from the drop in Beta ETF's long position.
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The idea behind CFI Holding SA and Beta ETF Nasdaq 100 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.

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