Correlation Between Link Real and CF Industries
Can any of the company-specific risk be diversified away by investing in both Link Real 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 Link Real and CF Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Link Real Estate and CF Industries Holdings, you can compare the effects of market volatilities on Link Real 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 Link Real with a short position of CF Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Link Real and CF Industries.
Diversification Opportunities for Link Real and CF Industries
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Link and CF Industries is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Link Real Estate 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 Link Real 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 Link Real Estate 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 Link Real i.e., Link Real and CF Industries go up and down completely randomly.
Pair Corralation between Link Real and CF Industries
Assuming the 90 days horizon Link Real Estate is expected to under-perform the CF Industries. In addition to that, Link Real is 1.89 times more volatile than CF Industries Holdings. It trades about -0.09 of its total potential returns per unit of risk. CF Industries Holdings is currently generating about 0.14 per unit of volatility. If you would invest 8,591 in CF Industries Holdings on September 3, 2024 and sell it today you would earn a total of 375.00 from holding CF Industries Holdings or generate 4.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Link Real Estate vs. CF Industries Holdings
Performance |
| Timeline |
| Link Real Estate |
| CF Industries Holdings |
Link Real and CF Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Link Real and CF Industries
The main advantage of trading using opposite Link Real and CF Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Link Real 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.| Link Real vs. Kimco Realty | Link Real vs. Simon Property Group | Link Real vs. Saul Centers | Link Real vs. Kimco Realty |
| 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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