Correlation Between CNH Industrial and Cornish Metals
Can any of the company-specific risk be diversified away by investing in both CNH Industrial and Cornish Metals 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 Cornish Metals 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 Cornish Metals, you can compare the effects of market volatilities on CNH Industrial and Cornish Metals 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 Cornish Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of CNH Industrial and Cornish Metals.
Diversification Opportunities for CNH Industrial and Cornish Metals
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between CNH and Cornish is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding CNH Industrial NV and Cornish Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cornish Metals 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 Cornish Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cornish Metals has no effect on the direction of CNH Industrial i.e., CNH Industrial and Cornish Metals go up and down completely randomly.
Pair Corralation between CNH Industrial and Cornish Metals
Assuming the 90 days trading horizon CNH Industrial NV is expected to generate 0.55 times more return on investment than Cornish Metals. However, CNH Industrial NV is 1.82 times less risky than Cornish Metals. It trades about 0.23 of its potential returns per unit of risk. Cornish Metals is currently generating about -0.11 per unit of risk. If you would invest 1,054 in CNH Industrial NV on August 30, 2024 and sell it today you would earn a total of 134.00 from holding CNH Industrial NV or generate 12.71% 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. Cornish Metals
Performance |
| Timeline |
| CNH Industrial NV |
| Cornish Metals |
CNH Industrial and Cornish Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CNH Industrial and Cornish Metals
The main advantage of trading using opposite CNH Industrial and Cornish Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CNH Industrial position performs unexpectedly, Cornish Metals 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 Cornish Metals will offset losses from the drop in Cornish Metals' long position.| CNH Industrial vs. Tungsten West PLC | CNH Industrial vs. Argo Group Limited | CNH Industrial vs. Hardide PLC | CNH Industrial vs. Versarien PLC |
| Cornish Metals vs. CNH Industrial NV | Cornish Metals vs. Central Asia Metals | Cornish Metals vs. McEwen Mining | Cornish Metals vs. Solstad Offshore ASA |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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