Correlation Between Retail Estates and CF Industries

Can any of the company-specific risk be diversified away by investing in both Retail Estates 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 Retail Estates and CF Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Retail Estates NV and CF Industries Holdings, you can compare the effects of market volatilities on Retail Estates 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 Retail Estates with a short position of CF Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Retail Estates and CF Industries.

Diversification Opportunities for Retail Estates and CF Industries

0.66

Correlation Coefficient

Retail Estates  CF Industries

Poor diversification

The 3 months correlation between Retail and C4F is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Retail Estates NV 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 Retail Estates 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 Retail Estates NV 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 Retail Estates i.e., Retail Estates and CF Industries go up and down completely randomly.

Pair Corralation between Retail Estates and CF Industries

Assuming the 90 days horizon Retail Estates is expected to generate 1.28 times less return on investment than CF Industries. But when comparing it to its historical volatility, Retail Estates NV is 1.91 times less risky than CF Industries. It trades about 0.19 of its potential returns per unit of risk. CF Industries Holdings is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  6,736  in CF Industries Holdings on April 24, 2025 and sell it today you would earn a total of  1,053  from holding CF Industries Holdings or generate 15.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Retail Estates NV  vs.  CF Industries Holdings

Retail Estates NV

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Retail Estates NV are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Retail Estates may actually be approaching a critical reversion point that can send shares even higher in August 2025.

CF Industries Holdings

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CF Industries Holdings are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, CF Industries reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Retail Estates and CF Industries

The main advantage of trading using opposite Retail Estates and CF Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Retail Estates 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 Retail Estates NV 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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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 CEOs Directory module to screen CEOs from public companies around the world.