Correlation Between CNH Industrial and MYR
Can any of the company-specific risk be diversified away by investing in both CNH Industrial and MYR 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 MYR 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 MYR Group, you can compare the effects of market volatilities on CNH Industrial and MYR 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 MYR. Check out your portfolio center. Please also check ongoing floating volatility patterns of CNH Industrial and MYR.
Diversification Opportunities for CNH Industrial and MYR
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CNH and MYR is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding CNH Industrial NV and MYR Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MYR Group 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 MYR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MYR Group has no effect on the direction of CNH Industrial i.e., CNH Industrial and MYR go up and down completely randomly.
Pair Corralation between CNH Industrial and MYR
Considering the 90-day investment horizon CNH Industrial is expected to generate 3.16 times less return on investment than MYR. But when comparing it to its historical volatility, CNH Industrial NV is 1.27 times less risky than MYR. It trades about 0.15 of its potential returns per unit of risk. MYR Group is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 11,646 in MYR Group on August 30, 2024 and sell it today you would earn a total of 4,131 from holding MYR Group or generate 35.47% 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. MYR Group
Performance |
| Timeline |
| CNH Industrial NV |
| MYR Group |
CNH Industrial and MYR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CNH Industrial and MYR
The main advantage of trading using opposite CNH Industrial and MYR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CNH Industrial position performs unexpectedly, MYR 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 MYR will offset losses from the drop in MYR's long position.| CNH Industrial vs. MYR Group | CNH Industrial vs. Granite Construction Incorporated | CNH Industrial vs. Construction Partners | CNH Industrial vs. Great Lakes Dredge |
| MYR vs. Comfort Systems USA | MYR vs. Granite Construction Incorporated | MYR vs. Dycom Industries | MYR vs. MasTec Inc |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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