Correlation Between EJF Investments and CNH Industrial
Can any of the company-specific risk be diversified away by investing in both EJF Investments and CNH Industrial 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 EJF Investments and CNH Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EJF Investments and CNH Industrial NV, you can compare the effects of market volatilities on EJF Investments and CNH Industrial 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 EJF Investments with a short position of CNH Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of EJF Investments and CNH Industrial.
Diversification Opportunities for EJF Investments and CNH Industrial
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between EJF and CNH is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding EJF Investments and CNH Industrial NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CNH Industrial NV and EJF Investments 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 EJF Investments are associated (or correlated) with CNH Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CNH Industrial NV has no effect on the direction of EJF Investments i.e., EJF Investments and CNH Industrial go up and down completely randomly.
Pair Corralation between EJF Investments and CNH Industrial
Assuming the 90 days trading horizon EJF Investments is expected to generate 74.78 times less return on investment than CNH Industrial. But when comparing it to its historical volatility, EJF Investments is 2.72 times less risky than CNH Industrial. It trades about 0.01 of its potential returns per unit of risk. CNH Industrial NV is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 1,055 in CNH Industrial NV on October 29, 2024 and sell it today you would earn a total of 175.00 from holding CNH Industrial NV or generate 16.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
EJF Investments vs. CNH Industrial NV
Performance |
| Timeline |
| EJF Investments |
| CNH Industrial NV |
EJF Investments and CNH Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EJF Investments and CNH Industrial
The main advantage of trading using opposite EJF Investments and CNH Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EJF Investments position performs unexpectedly, CNH Industrial 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 CNH Industrial will offset losses from the drop in CNH Industrial's long position.| EJF Investments vs. National Beverage Corp | EJF Investments vs. Associated British Foods | EJF Investments vs. Roadside Real Estate | EJF Investments vs. Molson Coors Beverage |
| CNH Industrial vs. Planet Fitness Cl | CNH Industrial vs. Smithson Investment Trust | CNH Industrial vs. Optima Health plc | CNH Industrial vs. BlackRock Frontiers Investment |
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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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