Correlation Between Dave Busters and CF Industries
Can any of the company-specific risk be diversified away by investing in both Dave Busters 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 Dave Busters and CF Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dave Busters Entertainment and CF Industries Holdings, you can compare the effects of market volatilities on Dave Busters 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 Dave Busters with a short position of CF Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dave Busters and CF Industries.
Diversification Opportunities for Dave Busters and CF Industries
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Dave and CF Industries is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Dave Busters Entertainment 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 Dave Busters 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 Dave Busters Entertainment 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 Dave Busters i.e., Dave Busters and CF Industries go up and down completely randomly.
Pair Corralation between Dave Busters and CF Industries
Given the investment horizon of 90 days Dave Busters is expected to generate 1.23 times less return on investment than CF Industries. In addition to that, Dave Busters is 2.27 times more volatile than CF Industries Holdings. It trades about 0.1 of its total potential returns per unit of risk. CF Industries Holdings is currently generating about 0.27 per unit of volatility. If you would invest 8,175 in CF Industries Holdings on September 1, 2024 and sell it today you would earn a total of 791.00 from holding CF Industries Holdings or generate 9.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dave Busters Entertainment vs. CF Industries Holdings
Performance |
| Timeline |
| Dave Busters Enterta |
| CF Industries Holdings |
Dave Busters and CF Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dave Busters and CF Industries
The main advantage of trading using opposite Dave Busters and CF Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dave Busters 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.| Dave Busters vs. The Wendys Co | Dave Busters vs. Shake Shack | Dave Busters vs. Papa Johns International | Dave Busters vs. Darden Restaurants |
| 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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