Correlation Between CFI Holding and TLT
Can any of the company-specific risk be diversified away by investing in both CFI Holding and TLT 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 TLT 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 TLT, you can compare the effects of market volatilities on CFI Holding and TLT 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 TLT. Check out your portfolio center. Please also check ongoing floating volatility patterns of CFI Holding and TLT.
Diversification Opportunities for CFI Holding and TLT
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between CFI and TLT is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding CFI Holding SA and TLT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TLT 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 TLT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TLT has no effect on the direction of CFI Holding i.e., CFI Holding and TLT go up and down completely randomly.
Pair Corralation between CFI Holding and TLT
Assuming the 90 days trading horizon CFI Holding SA is expected to under-perform the TLT. But the stock apears to be less risky and, when comparing its historical volatility, CFI Holding SA is 1.01 times less risky than TLT. The stock trades about -0.04 of its potential returns per unit of risk. The TLT is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 13.00 in TLT on August 30, 2024 and sell it today you would earn a total of 0.00 from holding TLT or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CFI Holding SA vs. TLT
Performance |
| Timeline |
| CFI Holding SA |
| TLT |
CFI Holding and TLT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CFI Holding and TLT
The main advantage of trading using opposite CFI Holding and TLT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CFI Holding position performs unexpectedly, TLT 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 TLT will offset losses from the drop in TLT's long position.| CFI Holding vs. Tower Investments SA | CFI Holding vs. Centrum Finansowe Banku | CFI Holding vs. Alior Bank SA | CFI Holding vs. Santander Bank Polska |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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