Correlation Between Rev and CNH Industrial
Can any of the company-specific risk be diversified away by investing in both Rev 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 Rev and CNH Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rev Group and CNH Industrial NV, you can compare the effects of market volatilities on Rev 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 Rev with a short position of CNH Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rev and CNH Industrial.
Diversification Opportunities for Rev and CNH Industrial
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Rev and CNH is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Rev Group 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 Rev 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 Rev Group 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 Rev i.e., Rev and CNH Industrial go up and down completely randomly.
Pair Corralation between Rev and CNH Industrial
Given the investment horizon of 90 days Rev Group is expected to generate 2.06 times more return on investment than CNH Industrial. However, Rev is 2.06 times more volatile than CNH Industrial NV. It trades about 0.13 of its potential returns per unit of risk. CNH Industrial NV is currently generating about 0.14 per unit of risk. If you would invest 2,964 in Rev Group on September 19, 2024 and sell it today you would earn a total of 296.00 from holding Rev Group or generate 9.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rev Group vs. CNH Industrial NV
Performance |
| Timeline |
| Rev Group |
| CNH Industrial NV |
Rev and CNH Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rev and CNH Industrial
The main advantage of trading using opposite Rev and CNH Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rev 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.The idea behind Rev Group and CNH Industrial NV pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| CNH Industrial vs. Columbus McKinnon | CNH Industrial vs. Astec Industries | CNH Industrial vs. Shyft Group | CNH Industrial vs. Rev 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
Other Complementary Tools
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm |