Correlation Between CNH Industrial and Tetragon Financial
Can any of the company-specific risk be diversified away by investing in both CNH Industrial and Tetragon Financial 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 Tetragon Financial 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 Tetragon Financial Group, you can compare the effects of market volatilities on CNH Industrial and Tetragon Financial 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 Tetragon Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of CNH Industrial and Tetragon Financial.
Diversification Opportunities for CNH Industrial and Tetragon Financial
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CNH and Tetragon is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding CNH Industrial NV and Tetragon Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tetragon Financial 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 Tetragon Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tetragon Financial has no effect on the direction of CNH Industrial i.e., CNH Industrial and Tetragon Financial go up and down completely randomly.
Pair Corralation between CNH Industrial and Tetragon Financial
Assuming the 90 days trading horizon CNH Industrial is expected to generate 1.79 times less return on investment than Tetragon Financial. In addition to that, CNH Industrial is 2.18 times more volatile than Tetragon Financial Group. It trades about 0.06 of its total potential returns per unit of risk. Tetragon Financial Group is currently generating about 0.24 per unit of volatility. If you would invest 992.00 in Tetragon Financial Group on November 2, 2024 and sell it today you would earn a total of 553.00 from holding Tetragon Financial Group or generate 55.75% 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. Tetragon Financial Group
Performance |
| Timeline |
| CNH Industrial NV |
| Tetragon Financial |
CNH Industrial and Tetragon Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CNH Industrial and Tetragon Financial
The main advantage of trading using opposite CNH Industrial and Tetragon Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CNH Industrial position performs unexpectedly, Tetragon Financial 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 Tetragon Financial will offset losses from the drop in Tetragon Financial's long position.| CNH Industrial vs. One Media iP | CNH Industrial vs. Take Two Interactive Software | CNH Industrial vs. Vietnam Enterprise Investments | CNH Industrial vs. Axway Software SA |
| Tetragon Financial vs. SupplyMe Capital PLC | Tetragon Financial vs. Premier African Minerals | Tetragon Financial vs. SANTANDER UK 8 | Tetragon Financial vs. Tower Resources 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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