Correlation Between CNH Industrial and Qurate Retail
Can any of the company-specific risk be diversified away by investing in both CNH Industrial and Qurate Retail 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 Qurate Retail 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 Qurate Retail Series, you can compare the effects of market volatilities on CNH Industrial and Qurate Retail 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 Qurate Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of CNH Industrial and Qurate Retail.
Diversification Opportunities for CNH Industrial and Qurate Retail
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between CNH and Qurate is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding CNH Industrial NV and Qurate Retail Series in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qurate Retail Series 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 Qurate Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qurate Retail Series has no effect on the direction of CNH Industrial i.e., CNH Industrial and Qurate Retail go up and down completely randomly.
Pair Corralation between CNH Industrial and Qurate Retail
Assuming the 90 days trading horizon CNH Industrial NV is expected to generate 1.09 times more return on investment than Qurate Retail. However, CNH Industrial is 1.09 times more volatile than Qurate Retail Series. It trades about 0.22 of its potential returns per unit of risk. Qurate Retail Series is currently generating about -0.08 per unit of risk. If you would invest 1,055 in CNH Industrial NV on November 7, 2024 and sell it today you would earn a total of 198.00 from holding CNH Industrial NV or generate 18.77% 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. Qurate Retail Series
Performance |
| Timeline |
| CNH Industrial NV |
| Qurate Retail Series |
CNH Industrial and Qurate Retail Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CNH Industrial and Qurate Retail
The main advantage of trading using opposite CNH Industrial and Qurate Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CNH Industrial position performs unexpectedly, Qurate Retail 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 Qurate Retail will offset losses from the drop in Qurate Retail's long position.| CNH Industrial vs. Xeros Technology Group | CNH Industrial vs. Logitech International SA | CNH Industrial vs. Gaztransport et Technigaz | CNH Industrial vs. Adriatic Metals |
| Qurate Retail vs. Samsung Electronics Co | Qurate Retail vs. Samsung Electronics Co | Qurate Retail vs. Toyota Motor Corp | Qurate Retail vs. Reliance Industries Ltd |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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