Correlation Between CNH Industrial and RATH Aktiengesellscha
Can any of the company-specific risk be diversified away by investing in both CNH Industrial and RATH Aktiengesellscha 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 RATH Aktiengesellscha 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 RATH Aktiengesellschaft, you can compare the effects of market volatilities on CNH Industrial and RATH Aktiengesellscha 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 RATH Aktiengesellscha. Check out your portfolio center. Please also check ongoing floating volatility patterns of CNH Industrial and RATH Aktiengesellscha.
Diversification Opportunities for CNH Industrial and RATH Aktiengesellscha
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between CNH and RATH is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding CNH Industrial NV and RATH Aktiengesellschaft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RATH Aktiengesellschaft 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 RATH Aktiengesellscha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RATH Aktiengesellschaft has no effect on the direction of CNH Industrial i.e., CNH Industrial and RATH Aktiengesellscha go up and down completely randomly.
Pair Corralation between CNH Industrial and RATH Aktiengesellscha
Assuming the 90 days trading horizon CNH Industrial NV is expected to generate 3.41 times more return on investment than RATH Aktiengesellscha. However, CNH Industrial is 3.41 times more volatile than RATH Aktiengesellschaft. It trades about 0.18 of its potential returns per unit of risk. RATH Aktiengesellschaft is currently generating about -0.13 per unit of risk. If you would invest 996.00 in CNH Industrial NV on August 29, 2024 and sell it today you would earn a total of 188.00 from holding CNH Industrial NV or generate 18.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 97.67% |
| Values | Daily Returns |
CNH Industrial NV vs. RATH Aktiengesellschaft
Performance |
| Timeline |
| CNH Industrial NV |
| RATH Aktiengesellschaft |
CNH Industrial and RATH Aktiengesellscha Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CNH Industrial and RATH Aktiengesellscha
The main advantage of trading using opposite CNH Industrial and RATH Aktiengesellscha positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CNH Industrial position performs unexpectedly, RATH Aktiengesellscha 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 RATH Aktiengesellscha will offset losses from the drop in RATH Aktiengesellscha's long position.| CNH Industrial vs. SBM Offshore NV | CNH Industrial vs. UNIQA Insurance Group | CNH Industrial vs. AMAG Austria Metall | CNH Industrial vs. BKS Bank AG |
| RATH Aktiengesellscha vs. UNIQA Insurance Group | RATH Aktiengesellscha vs. AMAG Austria Metall | RATH Aktiengesellscha vs. Universal Music Group | RATH Aktiengesellscha vs. Raiffeisen Bank International |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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