Correlation Between CNH Industrial and First
Can any of the company-specific risk be diversified away by investing in both CNH Industrial and First 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 First 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 First Class Metals, you can compare the effects of market volatilities on CNH Industrial and First 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 First. Check out your portfolio center. Please also check ongoing floating volatility patterns of CNH Industrial and First.
Diversification Opportunities for CNH Industrial and First
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between CNH and First is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding CNH Industrial NV and First Class Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Class 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 First. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Class Metals has no effect on the direction of CNH Industrial i.e., CNH Industrial and First go up and down completely randomly.
Pair Corralation between CNH Industrial and First
Assuming the 90 days trading horizon CNH Industrial NV is expected to generate 1.29 times more return on investment than First. However, CNH Industrial is 1.29 times more volatile than First Class Metals. It trades about 0.02 of its potential returns per unit of risk. First Class Metals is currently generating about -0.28 per unit of risk. If you would invest 1,055 in CNH Industrial NV on October 15, 2024 and sell it today you would earn a total of 0.00 from holding CNH Industrial NV or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CNH Industrial NV vs. First Class Metals
Performance |
| Timeline |
| CNH Industrial NV |
| First Class Metals |
CNH Industrial and First Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CNH Industrial and First
The main advantage of trading using opposite CNH Industrial and First positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CNH Industrial position performs unexpectedly, First 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 First will offset losses from the drop in First's long position.| CNH Industrial vs. Bankers Investment Trust | CNH Industrial vs. Tetragon Financial Group | CNH Industrial vs. Ameriprise Financial | CNH Industrial vs. Cembra Money Bank |
| First vs. Sunny Optical Technology | First vs. CNH Industrial NV | First vs. Alfa Financial Software | First vs. Aptitude Software Group |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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