Correlation Between CATLIN GROUP and CNH Industrial
Can any of the company-specific risk be diversified away by investing in both CATLIN GROUP 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 CATLIN GROUP and CNH Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CATLIN GROUP and CNH Industrial NV, you can compare the effects of market volatilities on CATLIN GROUP 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 CATLIN GROUP with a short position of CNH Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of CATLIN GROUP and CNH Industrial.
Diversification Opportunities for CATLIN GROUP and CNH Industrial
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CATLIN and CNH is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding CATLIN GROUP 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 CATLIN GROUP 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 CATLIN GROUP 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 CATLIN GROUP i.e., CATLIN GROUP and CNH Industrial go up and down completely randomly.
Pair Corralation between CATLIN GROUP and CNH Industrial
Assuming the 90 days trading horizon CATLIN GROUP is expected to under-perform the CNH Industrial. But the stock apears to be less risky and, when comparing its historical volatility, CATLIN GROUP is 12.88 times less risky than CNH Industrial. The stock trades about -0.14 of its potential returns per unit of risk. The CNH Industrial NV is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,033 in CNH Industrial NV on September 3, 2024 and sell it today you would earn a total of 22.00 from holding CNH Industrial NV or generate 2.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CATLIN GROUP vs. CNH Industrial NV
Performance |
| Timeline |
| CATLIN GROUP |
| CNH Industrial NV |
CATLIN GROUP and CNH Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CATLIN GROUP and CNH Industrial
The main advantage of trading using opposite CATLIN GROUP and CNH Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CATLIN GROUP 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.| CATLIN GROUP vs. Molson Coors Beverage | CATLIN GROUP vs. Flowtech Fluidpower plc | CATLIN GROUP vs. CleanTech Lithium plc | CATLIN GROUP vs. Monster Beverage Corp |
| CNH Industrial vs. Catalyst Media Group | CNH Industrial vs. CATLIN GROUP | CNH Industrial vs. Magnora ASA | CNH Industrial vs. RTW Venture Fund |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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