Correlation Between CNH Industrial and Golden Metal
Can any of the company-specific risk be diversified away by investing in both CNH Industrial and Golden Metal 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 Golden Metal 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 Golden Metal Resources, you can compare the effects of market volatilities on CNH Industrial and Golden Metal 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 Golden Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of CNH Industrial and Golden Metal.
Diversification Opportunities for CNH Industrial and Golden Metal
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CNH and Golden is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding CNH Industrial NV and Golden Metal Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Metal Resources 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 Golden Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Metal Resources has no effect on the direction of CNH Industrial i.e., CNH Industrial and Golden Metal go up and down completely randomly.
Pair Corralation between CNH Industrial and Golden Metal
Assuming the 90 days trading horizon CNH Industrial NV is expected to under-perform the Golden Metal. In addition to that, CNH Industrial is 2.21 times more volatile than Golden Metal Resources. It trades about -0.04 of its total potential returns per unit of risk. Golden Metal Resources is currently generating about 0.16 per unit of volatility. If you would invest 2,950 in Golden Metal Resources on October 12, 2024 and sell it today you would earn a total of 200.00 from holding Golden Metal Resources or generate 6.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CNH Industrial NV vs. Golden Metal Resources
Performance |
| Timeline |
| CNH Industrial NV |
| Golden Metal Resources |
CNH Industrial and Golden Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CNH Industrial and Golden Metal
The main advantage of trading using opposite CNH Industrial and Golden Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CNH Industrial position performs unexpectedly, Golden Metal 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 Golden Metal will offset losses from the drop in Golden Metal's long position.| CNH Industrial vs. Atresmedia | CNH Industrial vs. Prosiebensat 1 Media | CNH Industrial vs. XLMedia PLC | CNH Industrial vs. Ameriprise Financial |
| Golden Metal vs. European Metals Holdings | Golden Metal vs. CNH Industrial NV | Golden Metal vs. Empire Metals Limited | Golden Metal vs. Hochschild Mining plc |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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