Correlation Between CNH Industrial and BAWAG Group
Can any of the company-specific risk be diversified away by investing in both CNH Industrial and BAWAG Group 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 BAWAG Group 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 BAWAG Group AG, you can compare the effects of market volatilities on CNH Industrial and BAWAG Group 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 BAWAG Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of CNH Industrial and BAWAG Group.
Diversification Opportunities for CNH Industrial and BAWAG Group
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CNH and BAWAG is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding CNH Industrial NV and BAWAG Group AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BAWAG Group 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 BAWAG Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BAWAG Group AG has no effect on the direction of CNH Industrial i.e., CNH Industrial and BAWAG Group go up and down completely randomly.
Pair Corralation between CNH Industrial and BAWAG Group
Assuming the 90 days trading horizon CNH Industrial NV is expected to generate 1.95 times more return on investment than BAWAG Group. However, CNH Industrial is 1.95 times more volatile than BAWAG Group AG. It trades about 0.16 of its potential returns per unit of risk. BAWAG Group AG is currently generating about 0.28 per unit of risk. If you would invest 1,034 in CNH Industrial NV on September 18, 2024 and sell it today you would earn a total of 74.00 from holding CNH Industrial NV or generate 7.16% 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. BAWAG Group AG
Performance |
| Timeline |
| CNH Industrial NV |
| BAWAG Group AG |
CNH Industrial and BAWAG Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CNH Industrial and BAWAG Group
The main advantage of trading using opposite CNH Industrial and BAWAG Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CNH Industrial position performs unexpectedly, BAWAG Group 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 BAWAG Group will offset losses from the drop in BAWAG Group'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 |
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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