Correlation Between CNH Industrial and ATRenew
Can any of the company-specific risk be diversified away by investing in both CNH Industrial and ATRenew 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 ATRenew 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 ATRenew Inc DRC, you can compare the effects of market volatilities on CNH Industrial and ATRenew 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 ATRenew. Check out your portfolio center. Please also check ongoing floating volatility patterns of CNH Industrial and ATRenew.
Diversification Opportunities for CNH Industrial and ATRenew
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CNH and ATRenew is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding CNH Industrial NV and ATRenew Inc DRC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATRenew Inc DRC 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 ATRenew. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATRenew Inc DRC has no effect on the direction of CNH Industrial i.e., CNH Industrial and ATRenew go up and down completely randomly.
Pair Corralation between CNH Industrial and ATRenew
Considering the 90-day investment horizon CNH Industrial NV is expected to under-perform the ATRenew. But the stock apears to be less risky and, when comparing its historical volatility, CNH Industrial NV is 2.6 times less risky than ATRenew. The stock trades about -0.04 of its potential returns per unit of risk. The ATRenew Inc DRC is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 280.00 in ATRenew Inc DRC on September 21, 2024 and sell it today you would earn a total of 3.00 from holding ATRenew Inc DRC or generate 1.07% 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. ATRenew Inc DRC
Performance |
| Timeline |
| CNH Industrial NV |
| ATRenew Inc DRC |
CNH Industrial and ATRenew Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CNH Industrial and ATRenew
The main advantage of trading using opposite CNH Industrial and ATRenew positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CNH Industrial position performs unexpectedly, ATRenew 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 ATRenew will offset losses from the drop in ATRenew's long position.| CNH Industrial vs. ATRenew Inc DRC | CNH Industrial vs. Titan Machinery | CNH Industrial vs. Sealed Air | CNH Industrial vs. Chemours Co |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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