Correlation Between CNH Industrial and Foresight Environmental
Can any of the company-specific risk be diversified away by investing in both CNH Industrial and Foresight Environmental 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 Foresight Environmental 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 Foresight Environmental Infrastructure, you can compare the effects of market volatilities on CNH Industrial and Foresight Environmental 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 Foresight Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of CNH Industrial and Foresight Environmental.
Diversification Opportunities for CNH Industrial and Foresight Environmental
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CNH and Foresight is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding CNH Industrial NV and Foresight Environmental Infras in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foresight Environmental 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 Foresight Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Foresight Environmental has no effect on the direction of CNH Industrial i.e., CNH Industrial and Foresight Environmental go up and down completely randomly.
Pair Corralation between CNH Industrial and Foresight Environmental
Assuming the 90 days trading horizon CNH Industrial NV is expected to generate 1.27 times more return on investment than Foresight Environmental. However, CNH Industrial is 1.27 times more volatile than Foresight Environmental Infrastructure. It trades about 0.25 of its potential returns per unit of risk. Foresight Environmental Infrastructure is currently generating about -0.41 per unit of risk. If you would invest 1,054 in CNH Industrial NV on August 28, 2024 and sell it today you would earn a total of 139.00 from holding CNH Industrial NV or generate 13.19% 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. Foresight Environmental Infras
Performance |
| Timeline |
| CNH Industrial NV |
| Foresight Environmental |
CNH Industrial and Foresight Environmental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CNH Industrial and Foresight Environmental
The main advantage of trading using opposite CNH Industrial and Foresight Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CNH Industrial position performs unexpectedly, Foresight Environmental 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 Foresight Environmental will offset losses from the drop in Foresight Environmental's long position.| CNH Industrial vs. Roper Technologies | CNH Industrial vs. BioNTech SE | CNH Industrial vs. Amedeo Air Four | CNH Industrial vs. Made Tech 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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