Correlation Between CNH Industrial and Air Products
Can any of the company-specific risk be diversified away by investing in both CNH Industrial and Air Products 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 Air Products 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 Air Products Chemicals, you can compare the effects of market volatilities on CNH Industrial and Air Products 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 Air Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of CNH Industrial and Air Products.
Diversification Opportunities for CNH Industrial and Air Products
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between CNH and Air is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding CNH Industrial NV and Air Products Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Products Chemicals 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 Air Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Products Chemicals has no effect on the direction of CNH Industrial i.e., CNH Industrial and Air Products go up and down completely randomly.
Pair Corralation between CNH Industrial and Air Products
Assuming the 90 days trading horizon CNH Industrial NV is expected to under-perform the Air Products. But the stock apears to be less risky and, when comparing its historical volatility, CNH Industrial NV is 1.68 times less risky than Air Products. The stock trades about -0.01 of its potential returns per unit of risk. The Air Products Chemicals is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 29,283 in Air Products Chemicals on September 23, 2024 and sell it today you would earn a total of 37.00 from holding Air Products Chemicals or generate 0.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 93.6% |
| Values | Daily Returns |
CNH Industrial NV vs. Air Products Chemicals
Performance |
| Timeline |
| CNH Industrial NV |
| Air Products Chemicals |
CNH Industrial and Air Products Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CNH Industrial and Air Products
The main advantage of trading using opposite CNH Industrial and Air Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CNH Industrial position performs unexpectedly, Air Products 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 Air Products will offset losses from the drop in Air Products' long position.| CNH Industrial vs. Uniper SE | CNH Industrial vs. Mulberry Group PLC | CNH Industrial vs. London Security Plc | CNH Industrial vs. Triad Group PLC |
| Air Products vs. FC Investment Trust | Air Products vs. Axway Software SA | Air Products vs. Livermore Investments Group | Air Products vs. Atresmedia |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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