Correlation Between CNH Industrial and Ashtead Technology
Can any of the company-specific risk be diversified away by investing in both CNH Industrial and Ashtead Technology 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 Ashtead Technology 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 Ashtead Technology Holdings, you can compare the effects of market volatilities on CNH Industrial and Ashtead Technology 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 Ashtead Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of CNH Industrial and Ashtead Technology.
Diversification Opportunities for CNH Industrial and Ashtead Technology
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between CNH and Ashtead is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding CNH Industrial NV and Ashtead Technology Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashtead Technology 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 Ashtead Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ashtead Technology has no effect on the direction of CNH Industrial i.e., CNH Industrial and Ashtead Technology go up and down completely randomly.
Pair Corralation between CNH Industrial and Ashtead Technology
Assuming the 90 days trading horizon CNH Industrial NV is expected to generate 0.96 times more return on investment than Ashtead Technology. However, CNH Industrial NV is 1.04 times less risky than Ashtead Technology. It trades about 0.2 of its potential returns per unit of risk. Ashtead Technology Holdings is currently generating about 0.11 per unit of risk. If you would invest 1,055 in CNH Industrial NV on October 27, 2024 and sell it today you would earn a total of 175.00 from holding CNH Industrial NV or generate 16.59% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
CNH Industrial NV vs. Ashtead Technology Holdings
Performance |
Timeline |
CNH Industrial NV |
Ashtead Technology |
CNH Industrial and Ashtead Technology Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with CNH Industrial and Ashtead Technology
The main advantage of trading using opposite CNH Industrial and Ashtead Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CNH Industrial position performs unexpectedly, Ashtead Technology 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 Ashtead Technology will offset losses from the drop in Ashtead Technology's long position.CNH Industrial vs. Norman Broadbent Plc | CNH Industrial vs. Zegona Communications Plc | CNH Industrial vs. Cellnex Telecom SA | CNH Industrial vs. Eastman Chemical Co |
Ashtead Technology vs. Raytheon Technologies Corp | Ashtead Technology vs. Allianz Technology Trust | Ashtead Technology vs. Indutrade AB | Ashtead Technology vs. Spotify Technology SA |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
Other Complementary Tools
AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments |