Correlation Between CNH Industrial and Worldwide Healthcare
Can any of the company-specific risk be diversified away by investing in both CNH Industrial and Worldwide Healthcare 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 Worldwide Healthcare 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 Worldwide Healthcare Trust, you can compare the effects of market volatilities on CNH Industrial and Worldwide Healthcare 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 Worldwide Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of CNH Industrial and Worldwide Healthcare.
Diversification Opportunities for CNH Industrial and Worldwide Healthcare
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between CNH and Worldwide is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding CNH Industrial NV and Worldwide Healthcare Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Worldwide Healthcare 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 Worldwide Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Worldwide Healthcare has no effect on the direction of CNH Industrial i.e., CNH Industrial and Worldwide Healthcare go up and down completely randomly.
Pair Corralation between CNH Industrial and Worldwide Healthcare
Assuming the 90 days trading horizon CNH Industrial NV is expected to generate 4.49 times more return on investment than Worldwide Healthcare. However, CNH Industrial is 4.49 times more volatile than Worldwide Healthcare Trust. It trades about 0.22 of its potential returns per unit of risk. Worldwide Healthcare Trust is currently generating about 0.28 per unit of risk. If you would invest 1,055 in CNH Industrial NV on November 7, 2024 and sell it today you would earn a total of 198.00 from holding CNH Industrial NV or generate 18.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 91.3% |
| Values | Daily Returns |
CNH Industrial NV vs. Worldwide Healthcare Trust
Performance |
| Timeline |
| CNH Industrial NV |
| Worldwide Healthcare |
CNH Industrial and Worldwide Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CNH Industrial and Worldwide Healthcare
The main advantage of trading using opposite CNH Industrial and Worldwide Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CNH Industrial position performs unexpectedly, Worldwide Healthcare 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 Worldwide Healthcare will offset losses from the drop in Worldwide Healthcare's long position.| CNH Industrial vs. Xeros Technology Group | CNH Industrial vs. Logitech International SA | CNH Industrial vs. Gaztransport et Technigaz | CNH Industrial vs. Adriatic Metals |
| Worldwide Healthcare vs. Universal Display Corp | Worldwide Healthcare vs. Impax Environmental Markets | Worldwide Healthcare vs. Scandinavian Tobacco Group | Worldwide Healthcare vs. BW Offshore |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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