Correlation Between Minerals Technologies and CF Industries
Can any of the company-specific risk be diversified away by investing in both Minerals Technologies 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 Minerals Technologies and CF Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Minerals Technologies and CF Industries Holdings, you can compare the effects of market volatilities on Minerals Technologies 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 Minerals Technologies with a short position of CF Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Minerals Technologies and CF Industries.
Diversification Opportunities for Minerals Technologies and CF Industries
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Minerals and CF Industries is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Minerals Technologies 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 Minerals Technologies 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 Minerals Technologies 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 Minerals Technologies i.e., Minerals Technologies and CF Industries go up and down completely randomly.
Pair Corralation between Minerals Technologies and CF Industries
Considering the 90-day investment horizon Minerals Technologies is expected to generate 0.92 times more return on investment than CF Industries. However, Minerals Technologies is 1.08 times less risky than CF Industries. It trades about 0.05 of its potential returns per unit of risk. CF Industries Holdings is currently generating about 0.02 per unit of risk. If you would invest 6,255 in Minerals Technologies on August 27, 2024 and sell it today you would earn a total of 2,205 from holding Minerals Technologies or generate 35.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Minerals Technologies vs. CF Industries Holdings
Performance |
| Timeline |
| Minerals Technologies |
| CF Industries Holdings |
Minerals Technologies and CF Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Minerals Technologies and CF Industries
The main advantage of trading using opposite Minerals Technologies and CF Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Minerals Technologies 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.| Minerals Technologies vs. Oil Dri | Minerals Technologies vs. H B Fuller | Minerals Technologies vs. Northern Technologies | Minerals Technologies vs. Cabot |
| 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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