Correlation Between Hardide PLC and CNH Industrial
Can any of the company-specific risk be diversified away by investing in both Hardide PLC 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 Hardide PLC and CNH Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hardide PLC and CNH Industrial NV, you can compare the effects of market volatilities on Hardide PLC 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 Hardide PLC with a short position of CNH Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hardide PLC and CNH Industrial.
Diversification Opportunities for Hardide PLC and CNH Industrial
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hardide and CNH is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Hardide PLC 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 Hardide PLC 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 Hardide PLC 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 Hardide PLC i.e., Hardide PLC and CNH Industrial go up and down completely randomly.
Pair Corralation between Hardide PLC and CNH Industrial
Assuming the 90 days trading horizon Hardide PLC is expected to under-perform the CNH Industrial. In addition to that, Hardide PLC is 1.13 times more volatile than CNH Industrial NV. It trades about -0.2 of its total potential returns per unit of risk. CNH Industrial NV is currently generating about 0.13 per unit of volatility. If you would invest 1,055 in CNH Industrial NV on August 30, 2024 and sell it today you would earn a total of 133.00 from holding CNH Industrial NV or generate 12.61% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Hardide PLC vs. CNH Industrial NV
Performance |
Timeline |
Hardide PLC |
CNH Industrial NV |
Hardide PLC and CNH Industrial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hardide PLC and CNH Industrial
The main advantage of trading using opposite Hardide PLC and CNH Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hardide PLC 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.Hardide PLC vs. Gamma Communications PLC | Hardide PLC vs. MTI Wireless Edge | Hardide PLC vs. Cairn Homes PLC | Hardide PLC vs. X FAB Silicon Foundries |
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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