Correlation Between CNH Industrial and Novavax
Can any of the company-specific risk be diversified away by investing in both CNH Industrial and Novavax 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 CNH Industrial and Novavax into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CNH Industrial NV and Novavax, you can compare the effects of market volatilities on CNH Industrial and Novavax 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 CNH Industrial with a short position of Novavax. Check out your portfolio center. Please also check ongoing floating volatility patterns of CNH Industrial and Novavax.
Diversification Opportunities for CNH Industrial and Novavax
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CNH and Novavax is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding CNH Industrial NV and Novavax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novavax and CNH 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 CNH Industrial NV are associated (or correlated) with Novavax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novavax has no effect on the direction of CNH Industrial i.e., CNH Industrial and Novavax go up and down completely randomly.
Pair Corralation between CNH Industrial and Novavax
Assuming the 90 days trading horizon CNH Industrial is expected to generate 19.79 times less return on investment than Novavax. But when comparing it to its historical volatility, CNH Industrial NV is 5.78 times less risky than Novavax. It trades about 0.05 of its potential returns per unit of risk. Novavax is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 898.00 in Novavax on September 3, 2024 and sell it today you would earn a total of 292.00 from holding Novavax or generate 32.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CNH Industrial NV vs. Novavax
Performance |
| Timeline |
| CNH Industrial NV |
| Novavax |
CNH Industrial and Novavax Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CNH Industrial and Novavax
The main advantage of trading using opposite CNH Industrial and Novavax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CNH Industrial position performs unexpectedly, Novavax 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 Novavax will offset losses from the drop in Novavax's long position.| CNH Industrial vs. Catalyst Media Group | CNH Industrial vs. CATLIN GROUP | CNH Industrial vs. Magnora ASA | CNH Industrial vs. RTW Venture Fund |
| Novavax vs. Team Internet Group | Novavax vs. Gamma Communications PLC | Novavax vs. CNH Industrial NV | Novavax vs. Neometals |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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