Correlation Between CN MODERN and CNH Industrial
Can any of the company-specific risk be diversified away by investing in both CN MODERN and CNH Industrial 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 CN MODERN and CNH Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CN MODERN DAIRY and CNH Industrial NV, you can compare the effects of market volatilities on CN MODERN and CNH Industrial 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 CN MODERN with a short position of CNH Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of CN MODERN and CNH Industrial.
Diversification Opportunities for CN MODERN and CNH Industrial
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 07M and CNH is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding CN MODERN DAIRY and CNH Industrial NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CNH Industrial NV and CN MODERN 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 CN MODERN DAIRY are associated (or correlated) with CNH Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CNH Industrial NV has no effect on the direction of CN MODERN i.e., CN MODERN and CNH Industrial go up and down completely randomly.
Pair Corralation between CN MODERN and CNH Industrial
Assuming the 90 days trading horizon CN MODERN is expected to generate 49.51 times less return on investment than CNH Industrial. But when comparing it to its historical volatility, CN MODERN DAIRY is 1.98 times less risky than CNH Industrial. It trades about 0.01 of its potential returns per unit of risk. CNH Industrial NV is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 1,034 in CNH Industrial NV on September 1, 2024 and sell it today you would earn a total of 153.00 from holding CNH Industrial NV or generate 14.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
CN MODERN DAIRY vs. CNH Industrial NV
Performance |
| Timeline |
| CN MODERN DAIRY |
| CNH Industrial NV |
CN MODERN and CNH Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CN MODERN and CNH Industrial
The main advantage of trading using opposite CN MODERN and CNH Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CN MODERN position performs unexpectedly, CNH Industrial 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 CNH Industrial will offset losses from the drop in CNH Industrial's long position.| CN MODERN vs. Fast Retailing Co | CN MODERN vs. National Retail Properties | CN MODERN vs. AAC TECHNOLOGHLDGADR | CN MODERN vs. GLG LIFE TECH |
| CNH Industrial vs. JJ SNACK FOODS | CNH Industrial vs. EMBARK EDUCATION LTD | CNH Industrial vs. United Natural Foods | CNH Industrial vs. CN MODERN DAIRY |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas |