Correlation Between CNH Industrial and Lindsay
Can any of the company-specific risk be diversified away by investing in both CNH Industrial and Lindsay 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 Lindsay 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 Lindsay, you can compare the effects of market volatilities on CNH Industrial and Lindsay 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 Lindsay. Check out your portfolio center. Please also check ongoing floating volatility patterns of CNH Industrial and Lindsay.
Diversification Opportunities for CNH Industrial and Lindsay
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CNH and Lindsay is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding CNH Industrial NV and Lindsay in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lindsay 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 Lindsay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lindsay has no effect on the direction of CNH Industrial i.e., CNH Industrial and Lindsay go up and down completely randomly.
Pair Corralation between CNH Industrial and Lindsay
Considering the 90-day investment horizon CNH Industrial NV is expected to generate 1.01 times more return on investment than Lindsay. However, CNH Industrial is 1.01 times more volatile than Lindsay. It trades about 0.54 of its potential returns per unit of risk. Lindsay is currently generating about 0.49 per unit of risk. If you would invest 1,133 in CNH Industrial NV on November 1, 2024 and sell it today you would earn a total of 190.00 from holding CNH Industrial NV or generate 16.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CNH Industrial NV vs. Lindsay
Performance |
| Timeline |
| CNH Industrial NV |
| Lindsay |
CNH Industrial and Lindsay Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CNH Industrial and Lindsay
The main advantage of trading using opposite CNH Industrial and Lindsay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CNH Industrial position performs unexpectedly, Lindsay 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 Lindsay will offset losses from the drop in Lindsay's long position.| CNH Industrial vs. Tradeweb Markets | CNH Industrial vs. Alternative Investment | CNH Industrial vs. Compania Cervecerias Unidas | CNH Industrial vs. Summit Hotel Properties |
| Lindsay vs. Columbus McKinnon | Lindsay vs. Astec Industries | Lindsay vs. Shyft Group | Lindsay vs. AGCO Corporation |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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