Correlation Between Rumble and CF Industries
Can any of the company-specific risk be diversified away by investing in both Rumble 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 Rumble and CF Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rumble Inc and CF Industries Holdings, you can compare the effects of market volatilities on Rumble 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 Rumble with a short position of CF Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rumble and CF Industries.
Diversification Opportunities for Rumble and CF Industries
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Rumble and CF Industries is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Rumble Inc 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 Rumble 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 Rumble Inc 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 Rumble i.e., Rumble and CF Industries go up and down completely randomly.
Pair Corralation between Rumble and CF Industries
Considering the 90-day investment horizon Rumble Inc is expected to generate 2.64 times more return on investment than CF Industries. However, Rumble is 2.64 times more volatile than CF Industries Holdings. It trades about 0.01 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 900.00 in Rumble Inc on September 3, 2024 and sell it today you would lose (190.00) from holding Rumble Inc or give up 21.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rumble Inc vs. CF Industries Holdings
Performance |
| Timeline |
| Rumble Inc |
| CF Industries Holdings |
Rumble and CF Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rumble and CF Industries
The main advantage of trading using opposite Rumble and CF Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rumble 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.The idea behind Rumble Inc and CF Industries Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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