Correlation Between CNH Industrial and PPHE Hotel
Can any of the company-specific risk be diversified away by investing in both CNH Industrial and PPHE Hotel 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 PPHE Hotel 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 PPHE Hotel Group, you can compare the effects of market volatilities on CNH Industrial and PPHE Hotel 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 PPHE Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of CNH Industrial and PPHE Hotel.
Diversification Opportunities for CNH Industrial and PPHE Hotel
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between CNH and PPHE is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding CNH Industrial NV and PPHE Hotel Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PPHE Hotel Group 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 PPHE Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PPHE Hotel Group has no effect on the direction of CNH Industrial i.e., CNH Industrial and PPHE Hotel go up and down completely randomly.
Pair Corralation between CNH Industrial and PPHE Hotel
Assuming the 90 days trading horizon CNH Industrial NV is expected to generate 2.95 times more return on investment than PPHE Hotel. However, CNH Industrial is 2.95 times more volatile than PPHE Hotel Group. It trades about 0.04 of its potential returns per unit of risk. PPHE Hotel Group is currently generating about -0.07 per unit of risk. If you would invest 950.00 in CNH Industrial NV on September 2, 2024 and sell it today you would earn a total of 105.00 from holding CNH Industrial NV or generate 11.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.22% |
| Values | Daily Returns |
CNH Industrial NV vs. PPHE Hotel Group
Performance |
| Timeline |
| CNH Industrial NV |
| PPHE Hotel Group |
CNH Industrial and PPHE Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CNH Industrial and PPHE Hotel
The main advantage of trading using opposite CNH Industrial and PPHE Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CNH Industrial position performs unexpectedly, PPHE Hotel 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 PPHE Hotel will offset losses from the drop in PPHE Hotel's long position.| CNH Industrial vs. Kinnevik Investment AB | CNH Industrial vs. Science in Sport | CNH Industrial vs. The Mercantile Investment | CNH Industrial vs. Southern Copper Corp |
| PPHE Hotel vs. Ecclesiastical Insurance Office | PPHE Hotel vs. Norman Broadbent Plc | PPHE Hotel vs. Broadcom | PPHE Hotel vs. Systemair AB |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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