Correlation Between CNH Industrial and Abrdn European
Can any of the company-specific risk be diversified away by investing in both CNH Industrial and Abrdn European 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 Abrdn European 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 abrdn European Logistics, you can compare the effects of market volatilities on CNH Industrial and Abrdn European 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 Abrdn European. Check out your portfolio center. Please also check ongoing floating volatility patterns of CNH Industrial and Abrdn European.
Diversification Opportunities for CNH Industrial and Abrdn European
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CNH and Abrdn is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding CNH Industrial NV and abrdn European Logistics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on abrdn European Logistics 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 Abrdn European. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of abrdn European Logistics has no effect on the direction of CNH Industrial i.e., CNH Industrial and Abrdn European go up and down completely randomly.
Pair Corralation between CNH Industrial and Abrdn European
Assuming the 90 days trading horizon CNH Industrial NV is expected to generate 2.93 times more return on investment than Abrdn European. However, CNH Industrial is 2.93 times more volatile than abrdn European Logistics. It trades about 0.04 of its potential returns per unit of risk. abrdn European Logistics is currently generating about 0.06 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 | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CNH Industrial NV vs. abrdn European Logistics
Performance |
| Timeline |
| CNH Industrial NV |
| abrdn European Logistics |
CNH Industrial and Abrdn European Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CNH Industrial and Abrdn European
The main advantage of trading using opposite CNH Industrial and Abrdn European positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CNH Industrial position performs unexpectedly, Abrdn European 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 Abrdn European will offset losses from the drop in Abrdn European'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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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