Correlation Between HF Sinclair and CF Industries
Can any of the company-specific risk be diversified away by investing in both HF Sinclair and CF Industries 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 HF Sinclair and CF Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HF Sinclair Corp and CF Industries Holdings, you can compare the effects of market volatilities on HF Sinclair and CF Industries 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 HF Sinclair with a short position of CF Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of HF Sinclair and CF Industries.
Diversification Opportunities for HF Sinclair and CF Industries
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between DINO and CF Industries is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding HF Sinclair Corp and CF Industries Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CF Industries Holdings and HF Sinclair 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 HF Sinclair Corp are associated (or correlated) with CF Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CF Industries Holdings has no effect on the direction of HF Sinclair i.e., HF Sinclair and CF Industries go up and down completely randomly.
Pair Corralation between HF Sinclair and CF Industries
Given the investment horizon of 90 days HF Sinclair Corp is expected to generate 0.99 times more return on investment than CF Industries. However, HF Sinclair Corp is 1.01 times less risky than CF Industries. It trades about -0.02 of its potential returns per unit of risk. CF Industries Holdings is currently generating about -0.23 per unit of risk. If you would invest 3,684 in HF Sinclair Corp on November 27, 2024 and sell it today you would lose (54.00) from holding HF Sinclair Corp or give up 1.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HF Sinclair Corp vs. CF Industries Holdings
Performance |
| Timeline |
| HF Sinclair Corp |
| CF Industries Holdings |
HF Sinclair and CF Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HF Sinclair and CF Industries
The main advantage of trading using opposite HF Sinclair and CF Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HF Sinclair position performs unexpectedly, CF Industries 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 CF Industries will offset losses from the drop in CF Industries' long position.| HF Sinclair vs. Delek Energy | HF Sinclair vs. CVR Energy | HF Sinclair vs. Valero Energy | HF Sinclair vs. Marathon Petroleum Corp |
| CF Industries vs. Nutrien | CF Industries vs. Intrepid Potash | CF Industries vs. Corteva | CF Industries vs. ICL Israel Chemicals |
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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