Correlation Between CNH Industrial and Scandic Hotels
Can any of the company-specific risk be diversified away by investing in both CNH Industrial and Scandic Hotels 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 Scandic Hotels 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 Scandic Hotels Group, you can compare the effects of market volatilities on CNH Industrial and Scandic Hotels 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 Scandic Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of CNH Industrial and Scandic Hotels.
Diversification Opportunities for CNH Industrial and Scandic Hotels
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CNH and Scandic is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding CNH Industrial NV and Scandic Hotels Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandic Hotels Group 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 Scandic Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scandic Hotels Group has no effect on the direction of CNH Industrial i.e., CNH Industrial and Scandic Hotels go up and down completely randomly.
Pair Corralation between CNH Industrial and Scandic Hotels
Assuming the 90 days trading horizon CNH Industrial NV is expected to generate 3.15 times more return on investment than Scandic Hotels. However, CNH Industrial is 3.15 times more volatile than Scandic Hotels Group. It trades about 0.08 of its potential returns per unit of risk. Scandic Hotels Group is currently generating about 0.17 per unit of risk. If you would invest 1,057 in CNH Industrial NV on November 6, 2024 and sell it today you would earn a total of 164.00 from holding CNH Industrial NV or generate 15.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CNH Industrial NV vs. Scandic Hotels Group
Performance |
| Timeline |
| CNH Industrial NV |
| Scandic Hotels Group |
CNH Industrial and Scandic Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CNH Industrial and Scandic Hotels
The main advantage of trading using opposite CNH Industrial and Scandic Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CNH Industrial position performs unexpectedly, Scandic Hotels 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 Scandic Hotels will offset losses from the drop in Scandic Hotels' long position.| CNH Industrial vs. Check Point Software | CNH Industrial vs. Chrysalis Investments | CNH Industrial vs. Vitec Software Group | CNH Industrial vs. New Residential Investment |
| Scandic Hotels vs. Samsung Electronics Co | Scandic Hotels vs. Samsung Electronics Co | Scandic Hotels vs. Toyota Motor Corp | Scandic Hotels 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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