Correlation Between ORIX and CNH Industrial
Can any of the company-specific risk be diversified away by investing in both ORIX 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 ORIX and CNH Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ORIX Corporation and CNH Industrial NV, you can compare the effects of market volatilities on ORIX 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 ORIX with a short position of CNH Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of ORIX and CNH Industrial.
Diversification Opportunities for ORIX and CNH Industrial
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ORIX and CNH is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding ORIX Corp. 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 ORIX 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 ORIX Corporation 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 ORIX i.e., ORIX and CNH Industrial go up and down completely randomly.
Pair Corralation between ORIX and CNH Industrial
Assuming the 90 days horizon ORIX is expected to generate 1.58 times less return on investment than CNH Industrial. But when comparing it to its historical volatility, ORIX Corporation is 1.29 times less risky than CNH Industrial. It trades about 0.16 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 1,034 in CNH Industrial NV on September 3, 2024 and sell it today you would earn a total of 128.00 from holding CNH Industrial NV or generate 12.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ORIX Corp. vs. CNH Industrial NV
Performance |
| Timeline |
| ORIX |
| CNH Industrial NV |
ORIX and CNH Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ORIX and CNH Industrial
The main advantage of trading using opposite ORIX and CNH Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ORIX 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.| ORIX vs. Perseus Mining Limited | ORIX vs. PennyMac Mortgage Investment | ORIX vs. Japan Asia Investment | ORIX vs. MGIC INVESTMENT |
| CNH Industrial vs. TOTAL GABON | CNH Industrial vs. Walgreens Boots Alliance | CNH Industrial vs. Peak Resources Limited |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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