Correlation Between Innovative Industrial and CNH Industrial
Can any of the company-specific risk be diversified away by investing in both Innovative Industrial 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 Innovative Industrial and CNH Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Innovative Industrial Properties and CNH Industrial NV, you can compare the effects of market volatilities on Innovative Industrial 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 Innovative Industrial with a short position of CNH Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovative Industrial and CNH Industrial.
Diversification Opportunities for Innovative Industrial and CNH Industrial
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Innovative and CNH is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Innovative Industrial Properti 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 Innovative Industrial 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 Innovative Industrial Properties 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 Innovative Industrial i.e., Innovative Industrial and CNH Industrial go up and down completely randomly.
Pair Corralation between Innovative Industrial and CNH Industrial
Assuming the 90 days trading horizon Innovative Industrial Properties is expected to under-perform the CNH Industrial. In addition to that, Innovative Industrial is 1.09 times more volatile than CNH Industrial NV. It trades about -0.21 of its total potential returns per unit of risk. CNH Industrial NV is currently generating about 0.04 per unit of volatility. If you would invest 1,033 in CNH Industrial NV on September 5, 2024 and sell it today you would earn a total of 22.00 from holding CNH Industrial NV or generate 2.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Innovative Industrial Properti vs. CNH Industrial NV
Performance |
| Timeline |
| Innovative Industrial |
| CNH Industrial NV |
Innovative Industrial and CNH Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innovative Industrial and CNH Industrial
The main advantage of trading using opposite Innovative Industrial and CNH Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innovative Industrial 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.| Innovative Industrial vs. Samsung Electronics Co | Innovative Industrial vs. Samsung Electronics Co | Innovative Industrial vs. Hyundai Motor | Innovative Industrial vs. Toyota Motor Corp |
| CNH Industrial vs. Samsung Electronics Co | CNH Industrial vs. Samsung Electronics Co | CNH Industrial vs. Hyundai Motor | CNH Industrial vs. Toyota Motor Corp |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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