Correlation Between Columbus McKinnon and CNH Industrial
Can any of the company-specific risk be diversified away by investing in both Columbus McKinnon 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 Columbus McKinnon and CNH Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Columbus McKinnon and CNH Industrial NV, you can compare the effects of market volatilities on Columbus McKinnon 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 Columbus McKinnon with a short position of CNH Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbus McKinnon and CNH Industrial.
Diversification Opportunities for Columbus McKinnon and CNH Industrial
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Columbus and CNH is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Columbus McKinnon 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 Columbus McKinnon 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 Columbus McKinnon 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 Columbus McKinnon i.e., Columbus McKinnon and CNH Industrial go up and down completely randomly.
Pair Corralation between Columbus McKinnon and CNH Industrial
Given the investment horizon of 90 days Columbus McKinnon is expected to generate 0.98 times more return on investment than CNH Industrial. However, Columbus McKinnon is 1.02 times less risky than CNH Industrial. It trades about 0.04 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 3,040 in Columbus McKinnon on September 19, 2024 and sell it today you would earn a total of 677.50 from holding Columbus McKinnon or generate 22.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Columbus McKinnon vs. CNH Industrial NV
Performance |
| Timeline |
| Columbus McKinnon |
| CNH Industrial NV |
Columbus McKinnon and CNH Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Columbus McKinnon and CNH Industrial
The main advantage of trading using opposite Columbus McKinnon and CNH Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Columbus McKinnon 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.| Columbus McKinnon vs. Lindsay | Columbus McKinnon vs. Astec Industries | Columbus McKinnon vs. Shyft Group | Columbus McKinnon vs. AGCO Corporation |
| CNH Industrial vs. Columbus McKinnon | CNH Industrial vs. Astec Industries | CNH Industrial vs. Shyft Group | CNH Industrial vs. Rev Group |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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