Correlation Between Perma-Fix Environmental and CNH Industrial
Can any of the company-specific risk be diversified away by investing in both Perma-Fix Environmental 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 Perma-Fix Environmental and CNH Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Perma Fix Environmental Services and CNH Industrial NV, you can compare the effects of market volatilities on Perma-Fix Environmental 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 Perma-Fix Environmental with a short position of CNH Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Perma-Fix Environmental and CNH Industrial.
Diversification Opportunities for Perma-Fix Environmental and CNH Industrial
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Perma-Fix and CNH is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Perma Fix Environmental Servic 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 Perma-Fix Environmental 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 Perma Fix Environmental Services 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 Perma-Fix Environmental i.e., Perma-Fix Environmental and CNH Industrial go up and down completely randomly.
Pair Corralation between Perma-Fix Environmental and CNH Industrial
Assuming the 90 days trading horizon Perma-Fix Environmental is expected to generate 3.32 times less return on investment than CNH Industrial. In addition to that, Perma-Fix Environmental is 2.1 times more volatile than CNH Industrial NV. It trades about 0.04 of its total potential returns per unit of risk. CNH Industrial NV is currently generating about 0.26 per unit of volatility. If you would invest 1,040 in CNH Industrial NV on September 1, 2024 and sell it today you would earn a total of 152.00 from holding CNH Industrial NV or generate 14.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Perma Fix Environmental Servic vs. CNH Industrial NV
Performance |
| Timeline |
| Perma Fix Environmental |
| CNH Industrial NV |
Perma-Fix Environmental and CNH Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Perma-Fix Environmental and CNH Industrial
The main advantage of trading using opposite Perma-Fix Environmental and CNH Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Perma-Fix Environmental 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.| Perma-Fix Environmental vs. Veolia Environnement SA | Perma-Fix Environmental vs. Superior Plus Corp | Perma-Fix Environmental vs. NMI Holdings | Perma-Fix Environmental vs. Origin Agritech |
| CNH Industrial vs. Boiron SA | CNH Industrial vs. Perma Fix Environmental Services | CNH Industrial vs. BlueScope Steel Limited | CNH Industrial vs. GFL ENVIRONM |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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