Correlation Between Akamai Technologies and CF Industries

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Can any of the company-specific risk be diversified away by investing in both Akamai Technologies 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 Akamai Technologies and CF Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Akamai Technologies and CF Industries Holdings, you can compare the effects of market volatilities on Akamai Technologies 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 Akamai Technologies with a short position of CF Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Akamai Technologies and CF Industries.

Diversification Opportunities for Akamai Technologies and CF Industries

0.45
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Akamai and CF Industries is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Akamai Technologies 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 Akamai Technologies 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 Akamai Technologies 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 Akamai Technologies i.e., Akamai Technologies and CF Industries go up and down completely randomly.

Pair Corralation between Akamai Technologies and CF Industries

Given the investment horizon of 90 days Akamai Technologies is expected to generate 0.65 times more return on investment than CF Industries. However, Akamai Technologies is 1.54 times less risky than CF Industries. It trades about 0.15 of its potential returns per unit of risk. CF Industries Holdings is currently generating about -0.03 per unit of risk. If you would invest  8,386  in Akamai Technologies on September 8, 2022 and sell it today you would earn a total of  580.00  from holding Akamai Technologies or generate 6.92% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Akamai Technologies  vs.  CF Industries Holdings

 Performance (%) 
       Timeline  
Akamai Technologies 
Akamai Performance
0 of 100
Over the last 90 days Akamai Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively steady basic indicators, Akamai Technologies is not utilizing all of its potentials. The latest stock price chaos, may contribute to medium-term losses for the stakeholders.

Akamai Price Channel

CF Industries Holdings 
CF Industries Performance
0 of 100
Over the last 90 days CF Industries Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, CF Industries is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

CF Industries Price Channel

Akamai Technologies and CF Industries Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Akamai Technologies and CF Industries

The main advantage of trading using opposite Akamai Technologies and CF Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Akamai Technologies 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.
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The idea behind Akamai Technologies 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.
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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 Focused Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.

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