Correlation Between GFL ENVIRONM and CNH Industrial
Can any of the company-specific risk be diversified away by investing in both GFL ENVIRONM and CNH Industrial 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 GFL ENVIRONM and CNH Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GFL ENVIRONM and CNH Industrial NV, you can compare the effects of market volatilities on GFL ENVIRONM and CNH Industrial 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 GFL ENVIRONM with a short position of CNH Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of GFL ENVIRONM and CNH Industrial.
Diversification Opportunities for GFL ENVIRONM and CNH Industrial
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GFL and CNH is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding GFL ENVIRONM and CNH Industrial NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CNH Industrial NV and GFL ENVIRONM 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 GFL ENVIRONM are associated (or correlated) with CNH Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CNH Industrial NV has no effect on the direction of GFL ENVIRONM i.e., GFL ENVIRONM and CNH Industrial go up and down completely randomly.
Pair Corralation between GFL ENVIRONM and CNH Industrial
Assuming the 90 days horizon GFL ENVIRONM is expected to generate 1.18 times more return on investment than CNH Industrial. However, GFL ENVIRONM is 1.18 times more volatile than CNH Industrial NV. It trades about 0.06 of its potential returns per unit of risk. CNH Industrial NV is currently generating about -0.02 per unit of risk. If you would invest 2,771 in GFL ENVIRONM on September 3, 2024 and sell it today you would earn a total of 1,629 from holding GFL ENVIRONM or generate 58.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GFL ENVIRONM vs. CNH Industrial NV
Performance |
| Timeline |
| GFL ENVIRONM |
| CNH Industrial NV |
GFL ENVIRONM and CNH Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GFL ENVIRONM and CNH Industrial
The main advantage of trading using opposite GFL ENVIRONM and CNH Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GFL ENVIRONM position performs unexpectedly, CNH Industrial 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 CNH Industrial will offset losses from the drop in CNH Industrial's long position.| GFL ENVIRONM vs. TIANDE CHEMICAL | GFL ENVIRONM vs. PennyMac Mortgage Investment | GFL ENVIRONM vs. KINGBOARD CHEMICAL | GFL ENVIRONM vs. SEI INVESTMENTS |
| CNH Industrial vs. Zijin Mining Group | CNH Industrial vs. MCEWEN MINING INC | CNH Industrial vs. GUARDANT HEALTH CL | CNH Industrial vs. Jacquet Metal Service |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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