Correlation Between Yara International and CF Industries
Can any of the company-specific risk be diversified away by investing in both Yara International 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 Yara International and CF Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yara International ASA and CF Industries Holdings, you can compare the effects of market volatilities on Yara International 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 Yara International with a short position of CF Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yara International and CF Industries.
Diversification Opportunities for Yara International and CF Industries
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Yara and CF Industries is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Yara International ASA 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 Yara International 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 Yara International ASA 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 Yara International i.e., Yara International and CF Industries go up and down completely randomly.
Pair Corralation between Yara International and CF Industries
Assuming the 90 days horizon Yara International ASA is expected to under-perform the CF Industries. In addition to that, Yara International is 1.08 times more volatile than CF Industries Holdings. It trades about -0.21 of its total potential returns per unit of risk. CF Industries Holdings is currently generating about 0.26 per unit of volatility. If you would invest 8,089 in CF Industries Holdings on August 30, 2024 and sell it today you would earn a total of 777.00 from holding CF Industries Holdings or generate 9.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yara International ASA vs. CF Industries Holdings
Performance |
| Timeline |
| Yara International ASA |
| CF Industries Holdings |
Yara International and CF Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yara International and CF Industries
The main advantage of trading using opposite Yara International and CF Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yara International 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.| Yara International vs. KS AG DRC | Yara International vs. ICL Israel Chemicals | Yara International vs. CF Industries Holdings | Yara International vs. The Mosaic |
| CF Industries vs. Nutrien | CF Industries vs. Intrepid Potash | CF Industries vs. Corteva | CF Industries vs. FMC Corporation |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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