Correlation Between CNH Industrial and ACG Acquisition
Can any of the company-specific risk be diversified away by investing in both CNH Industrial and ACG Acquisition 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 ACG Acquisition 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 ACG Acquisition Co, you can compare the effects of market volatilities on CNH Industrial and ACG Acquisition 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 ACG Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of CNH Industrial and ACG Acquisition.
Diversification Opportunities for CNH Industrial and ACG Acquisition
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CNH and ACG is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding CNH Industrial NV and ACG Acquisition Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ACG Acquisition 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 ACG Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ACG Acquisition has no effect on the direction of CNH Industrial i.e., CNH Industrial and ACG Acquisition go up and down completely randomly.
Pair Corralation between CNH Industrial and ACG Acquisition
Assuming the 90 days trading horizon CNH Industrial NV is expected to generate 3.03 times more return on investment than ACG Acquisition. However, CNH Industrial is 3.03 times more volatile than ACG Acquisition Co. It trades about 0.04 of its potential returns per unit of risk. ACG Acquisition Co is currently generating about 0.01 per unit of risk. If you would invest 1,033 in CNH Industrial NV on September 4, 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 | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
CNH Industrial NV vs. ACG Acquisition Co
Performance |
| Timeline |
| CNH Industrial NV |
| ACG Acquisition |
CNH Industrial and ACG Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CNH Industrial and ACG Acquisition
The main advantage of trading using opposite CNH Industrial and ACG Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CNH Industrial position performs unexpectedly, ACG Acquisition 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 ACG Acquisition will offset losses from the drop in ACG Acquisition's long position.| CNH Industrial vs. Samsung Electronics Co | CNH Industrial vs. Samsung Electronics Co | CNH Industrial vs. Hyundai Motor | CNH Industrial vs. Toyota Motor Corp |
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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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