Correlation Between CNH Industrial and Firan Technology
Can any of the company-specific risk be diversified away by investing in both CNH Industrial and Firan Technology 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 Firan Technology 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 Firan Technology Group, you can compare the effects of market volatilities on CNH Industrial and Firan Technology 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 Firan Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of CNH Industrial and Firan Technology.
Diversification Opportunities for CNH Industrial and Firan Technology
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between CNH and Firan is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding CNH Industrial NV and Firan Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Firan Technology 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 Firan Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Firan Technology has no effect on the direction of CNH Industrial i.e., CNH Industrial and Firan Technology go up and down completely randomly.
Pair Corralation between CNH Industrial and Firan Technology
Assuming the 90 days trading horizon CNH Industrial NV is expected to generate 3.16 times more return on investment than Firan Technology. However, CNH Industrial is 3.16 times more volatile than Firan Technology Group. It trades about 0.06 of its potential returns per unit of risk. Firan Technology Group is currently generating about 0.13 per unit of risk. If you would invest 1,059 in CNH Industrial NV on October 24, 2024 and sell it today you would earn a total of 26.00 from holding CNH Industrial NV or generate 2.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
CNH Industrial NV vs. Firan Technology Group
Performance |
| Timeline |
| CNH Industrial NV |
| Firan Technology |
CNH Industrial and Firan Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CNH Industrial and Firan Technology
The main advantage of trading using opposite CNH Industrial and Firan Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CNH Industrial position performs unexpectedly, Firan Technology 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 Firan Technology will offset losses from the drop in Firan Technology's long position.| CNH Industrial vs. Firan Technology Group | CNH Industrial vs. HOME DEPOT | CNH Industrial vs. GLG LIFE TECH | CNH Industrial vs. Easy Software AG |
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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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