Correlation Between Sable Offshore and CF Industries
Can any of the company-specific risk be diversified away by investing in both Sable Offshore 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 Sable Offshore and CF Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sable Offshore Corp and CF Industries Holdings, you can compare the effects of market volatilities on Sable Offshore 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 Sable Offshore with a short position of CF Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sable Offshore and CF Industries.
Diversification Opportunities for Sable Offshore and CF Industries
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Sable and CF Industries is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Sable Offshore 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 Sable Offshore 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 Sable Offshore 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 Sable Offshore i.e., Sable Offshore and CF Industries go up and down completely randomly.
Pair Corralation between Sable Offshore and CF Industries
Considering the 90-day investment horizon Sable Offshore Corp is expected to generate 2.1 times more return on investment than CF Industries. However, Sable Offshore is 2.1 times more volatile than CF Industries Holdings. It trades about 0.16 of its potential returns per unit of risk. CF Industries Holdings is currently generating about 0.27 per unit of risk. If you would invest 2,105 in Sable Offshore Corp on August 31, 2024 and sell it today you would earn a total of 243.00 from holding Sable Offshore Corp or generate 11.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sable Offshore Corp vs. CF Industries Holdings
Performance |
| Timeline |
| Sable Offshore Corp |
| CF Industries Holdings |
Sable Offshore and CF Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sable Offshore and CF Industries
The main advantage of trading using opposite Sable Offshore and CF Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sable Offshore 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.| Sable Offshore vs. Nabors Industries | Sable Offshore vs. Patterson UTI Energy | Sable Offshore vs. Noble plc | Sable Offshore vs. Helmerich and Payne |
| 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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