Correlation Between CF Industries and Unilever
Can any of the company-specific risk be diversified away by investing in both CF Industries and Unilever 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 CF Industries and Unilever into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CF Industries Holdings and The Unilever Group, you can compare the effects of market volatilities on CF Industries and Unilever 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 CF Industries with a short position of Unilever. Check out your portfolio center. Please also check ongoing floating volatility patterns of CF Industries and Unilever.
Diversification Opportunities for CF Industries and Unilever
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between CF Industries and Unilever is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding CF Industries Holdings and The Unilever Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unilever Group and CF Industries 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 CF Industries Holdings are associated (or correlated) with Unilever. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unilever Group has no effect on the direction of CF Industries i.e., CF Industries and Unilever go up and down completely randomly.
Pair Corralation between CF Industries and Unilever
If you would invest (100.00) in The Unilever Group on February 23, 2024 and sell it today you would earn a total of 100.00 from holding The Unilever Group or generate -100.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Flat |
Strength | Insignificant |
Accuracy | 0.0% |
Values | Daily Returns |
CF Industries Holdings vs. The Unilever Group
Performance |
Timeline |
CF Industries Holdings |
Unilever Group |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
CF Industries and Unilever Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with CF Industries and Unilever
The main advantage of trading using opposite CF Industries and Unilever positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CF Industries position performs unexpectedly, Unilever 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 Unilever will offset losses from the drop in Unilever's long position.The idea behind CF Industries Holdings and The Unilever Group 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.Unilever vs. Dyadic International | Unilever vs. Alternative Investment | Unilever vs. Maravai Lifesciences HoldingsInc | Unilever vs. Ardelyx |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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