Correlation Between Allianz Technology and CNH Industrial
Can any of the company-specific risk be diversified away by investing in both Allianz Technology 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 Allianz Technology and CNH Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Allianz Technology Trust and CNH Industrial NV, you can compare the effects of market volatilities on Allianz Technology 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 Allianz Technology with a short position of CNH Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allianz Technology and CNH Industrial.
Diversification Opportunities for Allianz Technology and CNH Industrial
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Allianz and CNH is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Allianz Technology Trust 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 Allianz Technology 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 Allianz Technology Trust 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 Allianz Technology i.e., Allianz Technology and CNH Industrial go up and down completely randomly.
Pair Corralation between Allianz Technology and CNH Industrial
Assuming the 90 days trading horizon Allianz Technology is expected to generate 1.51 times less return on investment than CNH Industrial. But when comparing it to its historical volatility, Allianz Technology Trust is 3.36 times less risky than CNH Industrial. It trades about 0.11 of its potential returns per unit of risk. CNH Industrial NV is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,178 in CNH Industrial NV on October 30, 2024 and sell it today you would earn a total of 61.00 from holding CNH Industrial NV or generate 5.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Allianz Technology Trust vs. CNH Industrial NV
Performance |
| Timeline |
| Allianz Technology Trust |
| CNH Industrial NV |
Allianz Technology and CNH Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Allianz Technology and CNH Industrial
The main advantage of trading using opposite Allianz Technology and CNH Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allianz Technology 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.| Allianz Technology vs. Porvair plc | Allianz Technology vs. Arrow Electronics | Allianz Technology vs. Amedeo Air Four | Allianz Technology vs. Batm Advanced Communications |
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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