Correlation Between AGCO and CNH Industrial
Can any of the company-specific risk be diversified away by investing in both AGCO 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 AGCO and CNH Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AGCO Corporation and CNH Industrial NV, you can compare the effects of market volatilities on AGCO 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 AGCO with a short position of CNH Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of AGCO and CNH Industrial.
Diversification Opportunities for AGCO and CNH Industrial
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between AGCO and CNH is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding AGCO Corp. 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 AGCO 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 AGCO Corporation 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 AGCO i.e., AGCO and CNH Industrial go up and down completely randomly.
Pair Corralation between AGCO and CNH Industrial
If you would invest 10,157 in AGCO Corporation on August 28, 2024 and sell it today you would lose (53.00) from holding AGCO Corporation or give up 0.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 4.76% |
| Values | Daily Returns |
AGCO Corp. vs. CNH Industrial NV
Performance |
| Timeline |
| AGCO |
| CNH Industrial NV |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
AGCO and CNH Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AGCO and CNH Industrial
The main advantage of trading using opposite AGCO and CNH Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AGCO 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.The idea behind AGCO Corporation and CNH Industrial NV pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| CNH Industrial vs. Deere Company | CNH Industrial vs. Lindsay | CNH Industrial vs. Alamo Group | CNH Industrial vs. Caterpillar |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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