Correlation Between JPMorgan Global and CNH Industrial
Can any of the company-specific risk be diversified away by investing in both JPMorgan Global 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 JPMorgan Global and CNH Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JPMorgan Global Emerging and CNH Industrial NV, you can compare the effects of market volatilities on JPMorgan Global 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 JPMorgan Global with a short position of CNH Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan Global and CNH Industrial.
Diversification Opportunities for JPMorgan Global and CNH Industrial
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between JPMorgan and CNH is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Global Emerging 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 JPMorgan Global 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 JPMorgan Global Emerging 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 JPMorgan Global i.e., JPMorgan Global and CNH Industrial go up and down completely randomly.
Pair Corralation between JPMorgan Global and CNH Industrial
Assuming the 90 days trading horizon JPMorgan Global Emerging is expected to under-perform the CNH Industrial. But the stock apears to be less risky and, when comparing its historical volatility, JPMorgan Global Emerging is 3.11 times less risky than CNH Industrial. The stock trades about -0.11 of its potential returns per unit of risk. The CNH Industrial NV is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,055 in CNH Industrial NV on September 12, 2024 and sell it today you would earn a total of 0.00 from holding CNH Industrial NV or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
JPMorgan Global Emerging vs. CNH Industrial NV
Performance |
| Timeline |
| JPMorgan Global Emerging |
| CNH Industrial NV |
JPMorgan Global and CNH Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JPMorgan Global and CNH Industrial
The main advantage of trading using opposite JPMorgan Global and CNH Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JPMorgan Global 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.| JPMorgan Global vs. Ebro Foods | JPMorgan Global vs. Associated British Foods | JPMorgan Global vs. Flutter Entertainment PLC | JPMorgan Global vs. Cars Inc |
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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