Correlation Between CNH Industrial and Atome Energy
Can any of the company-specific risk be diversified away by investing in both CNH Industrial and Atome Energy 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 Atome Energy 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 Atome Energy PLC, you can compare the effects of market volatilities on CNH Industrial and Atome Energy 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 Atome Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of CNH Industrial and Atome Energy.
Diversification Opportunities for CNH Industrial and Atome Energy
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CNH and Atome is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding CNH Industrial NV and Atome Energy PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atome Energy PLC 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 Atome Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atome Energy PLC has no effect on the direction of CNH Industrial i.e., CNH Industrial and Atome Energy go up and down completely randomly.
Pair Corralation between CNH Industrial and Atome Energy
Assuming the 90 days trading horizon CNH Industrial NV is expected to generate 1.78 times more return on investment than Atome Energy. However, CNH Industrial is 1.78 times more volatile than Atome Energy PLC. It trades about 0.22 of its potential returns per unit of risk. Atome Energy PLC is currently generating about 0.01 per unit of risk. If you would invest 1,055 in CNH Industrial NV on October 26, 2024 and sell it today you would earn a total of 183.00 from holding CNH Industrial NV or generate 17.35% 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. Atome Energy PLC
Performance |
| Timeline |
| CNH Industrial NV |
| Atome Energy PLC |
CNH Industrial and Atome Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CNH Industrial and Atome Energy
The main advantage of trading using opposite CNH Industrial and Atome Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CNH Industrial position performs unexpectedly, Atome Energy 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 Atome Energy will offset losses from the drop in Atome Energy's long position.| CNH Industrial vs. Trainline Plc | CNH Industrial vs. MoneysupermarketCom Group PLC | CNH Industrial vs. National Beverage Corp | CNH Industrial vs. JB Hunt Transport |
| Atome Energy vs. Associated British Foods | Atome Energy vs. Nordic Semiconductor ASA | Atome Energy vs. Ebro Foods | Atome Energy vs. Roper Technologies |
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 Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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