Correlation Between Palfinger and CNH Industrial
Can any of the company-specific risk be diversified away by investing in both Palfinger 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 Palfinger and CNH Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Palfinger AG and CNH Industrial NV, you can compare the effects of market volatilities on Palfinger 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 Palfinger with a short position of CNH Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Palfinger and CNH Industrial.
Diversification Opportunities for Palfinger and CNH Industrial
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Palfinger and CNH is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Palfinger AG 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 Palfinger 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 Palfinger AG 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 Palfinger i.e., Palfinger and CNH Industrial go up and down completely randomly.
Pair Corralation between Palfinger and CNH Industrial
Assuming the 90 days trading horizon Palfinger AG is expected to under-perform the CNH Industrial. But the stock apears to be less risky and, when comparing its historical volatility, Palfinger AG is 1.22 times less risky than CNH Industrial. The stock trades about -0.02 of its potential returns per unit of risk. The CNH Industrial NV is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 1,507 in CNH Industrial NV on September 2, 2024 and sell it today you would lose (309.00) from holding CNH Industrial NV or give up 20.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Palfinger AG vs. CNH Industrial NV
Performance |
| Timeline |
| Palfinger AG |
| CNH Industrial NV |
Palfinger and CNH Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Palfinger and CNH Industrial
The main advantage of trading using opposite Palfinger and CNH Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Palfinger 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.| Palfinger vs. RATH Aktiengesellschaft | Palfinger vs. Semperit Aktiengesellschaft Holding | Palfinger vs. Telekom Austria AG | Palfinger vs. Oesterr Post AG |
| CNH Industrial vs. Addiko Bank AG | CNH Industrial vs. Universal Music Group | CNH Industrial vs. AMAG Austria Metall | CNH Industrial vs. UNIQA Insurance Group |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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