Correlation Between CNH Industrial and International Biotechnology
Can any of the company-specific risk be diversified away by investing in both CNH Industrial and International Biotechnology 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 International Biotechnology 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 International Biotechnology Trust, you can compare the effects of market volatilities on CNH Industrial and International Biotechnology 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 International Biotechnology. Check out your portfolio center. Please also check ongoing floating volatility patterns of CNH Industrial and International Biotechnology.
Diversification Opportunities for CNH Industrial and International Biotechnology
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between CNH and International is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding CNH Industrial NV and International Biotechnology Tr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Biotechnology 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 International Biotechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Biotechnology has no effect on the direction of CNH Industrial i.e., CNH Industrial and International Biotechnology go up and down completely randomly.
Pair Corralation between CNH Industrial and International Biotechnology
Assuming the 90 days trading horizon CNH Industrial NV is expected to under-perform the International Biotechnology. In addition to that, CNH Industrial is 2.25 times more volatile than International Biotechnology Trust. It trades about -0.01 of its total potential returns per unit of risk. International Biotechnology Trust is currently generating about 0.01 per unit of volatility. If you would invest 65,391 in International Biotechnology Trust on August 25, 2024 and sell it today you would earn a total of 3,209 from holding International Biotechnology Trust or generate 4.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 93.39% |
| Values | Daily Returns |
CNH Industrial NV vs. International Biotechnology Tr
Performance |
| Timeline |
| CNH Industrial NV |
| International Biotechnology |
CNH Industrial and International Biotechnology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CNH Industrial and International Biotechnology
The main advantage of trading using opposite CNH Industrial and International Biotechnology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CNH Industrial position performs unexpectedly, International Biotechnology 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 International Biotechnology will offset losses from the drop in International Biotechnology's long position.| CNH Industrial vs. Samsung Electronics Co | CNH Industrial vs. Samsung Electronics Co | CNH Industrial vs. Hyundai Motor | CNH Industrial vs. Toyota Motor Corp |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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