Correlation Between CNH Industrial and CEA Industries
Can any of the company-specific risk be diversified away by investing in both CNH Industrial and CEA Industries 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 CEA Industries 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 CEA Industries Warrant, you can compare the effects of market volatilities on CNH Industrial and CEA Industries 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 CEA Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of CNH Industrial and CEA Industries.
Diversification Opportunities for CNH Industrial and CEA Industries
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between CNH and CEA is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding CNH Industrial NV and CEA Industries Warrant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CEA Industries Warrant 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 CEA Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CEA Industries Warrant has no effect on the direction of CNH Industrial i.e., CNH Industrial and CEA Industries go up and down completely randomly.
Pair Corralation between CNH Industrial and CEA Industries
Considering the 90-day investment horizon CNH Industrial is expected to generate 11.44 times less return on investment than CEA Industries. But when comparing it to its historical volatility, CNH Industrial NV is 34.83 times less risky than CEA Industries. It trades about 0.43 of its potential returns per unit of risk. CEA Industries Warrant is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 1.27 in CEA Industries Warrant on October 20, 2024 and sell it today you would lose (0.28) from holding CEA Industries Warrant or give up 22.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
CNH Industrial NV vs. CEA Industries Warrant
Performance |
| Timeline |
| CNH Industrial NV |
| CEA Industries Warrant |
CNH Industrial and CEA Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CNH Industrial and CEA Industries
The main advantage of trading using opposite CNH Industrial and CEA Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CNH Industrial position performs unexpectedly, CEA Industries 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 CEA Industries will offset losses from the drop in CEA Industries' long position.| CNH Industrial vs. Cresud SACIF y | CNH Industrial vs. BBB Foods | CNH Industrial vs. The Andersons | CNH Industrial vs. AMCON Distributing |
| CEA Industries vs. CEA Industries | CEA Industries vs. Thayer Ventures Acquisition | CEA Industries vs. Iveda Solutions Warrant |
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 Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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