Correlation Between CNH Industrial and Addiko Bank
Can any of the company-specific risk be diversified away by investing in both CNH Industrial and Addiko Bank 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 Addiko Bank 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 Addiko Bank AG, you can compare the effects of market volatilities on CNH Industrial and Addiko Bank 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 Addiko Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of CNH Industrial and Addiko Bank.
Diversification Opportunities for CNH Industrial and Addiko Bank
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CNH and Addiko is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding CNH Industrial NV and Addiko Bank AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Addiko Bank AG 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 Addiko Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Addiko Bank AG has no effect on the direction of CNH Industrial i.e., CNH Industrial and Addiko Bank go up and down completely randomly.
Pair Corralation between CNH Industrial and Addiko Bank
Assuming the 90 days trading horizon CNH Industrial NV is expected to generate 5.01 times more return on investment than Addiko Bank. However, CNH Industrial is 5.01 times more volatile than Addiko Bank AG. It trades about 0.2 of its potential returns per unit of risk. Addiko Bank AG is currently generating about 0.12 per unit of risk. If you would invest 1,059 in CNH Industrial NV on August 28, 2024 and sell it today you would earn a total of 139.00 from holding CNH Industrial NV or generate 13.13% 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. Addiko Bank AG
Performance |
| Timeline |
| CNH Industrial NV |
| Addiko Bank AG |
CNH Industrial and Addiko Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CNH Industrial and Addiko Bank
The main advantage of trading using opposite CNH Industrial and Addiko Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CNH Industrial position performs unexpectedly, Addiko Bank 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 Addiko Bank will offset losses from the drop in Addiko Bank's long position.| CNH Industrial vs. RATH Aktiengesellschaft | CNH Industrial vs. AT S Austria | CNH Industrial vs. BAWAG Group AG | CNH Industrial vs. Semperit Aktiengesellschaft Holding |
| Addiko Bank vs. Raiffeisen Bank International | Addiko Bank vs. BAWAG Group AG | Addiko Bank vs. Wiener Privatbank SE |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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