Correlation Between Shyft and CNH Industrial
Can any of the company-specific risk be diversified away by investing in both Shyft 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 Shyft and CNH Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shyft Group and CNH Industrial NV, you can compare the effects of market volatilities on Shyft 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 Shyft with a short position of CNH Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shyft and CNH Industrial.
Diversification Opportunities for Shyft and CNH Industrial
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Shyft and CNH is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Shyft 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 Shyft 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 Shyft 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 Shyft i.e., Shyft and CNH Industrial go up and down completely randomly.
Pair Corralation between Shyft and CNH Industrial
Given the investment horizon of 90 days Shyft Group is expected to under-perform the CNH Industrial. In addition to that, Shyft is 1.71 times more volatile than CNH Industrial NV. It trades about -0.08 of its total potential returns per unit of risk. CNH Industrial NV is currently generating about 0.02 per unit of volatility. If you would invest 1,099 in CNH Industrial NV on September 19, 2024 and sell it today you would earn a total of 5.00 from holding CNH Industrial NV or generate 0.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shyft Group vs. CNH Industrial NV
Performance |
| Timeline |
| Shyft Group |
| CNH Industrial NV |
Shyft and CNH Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shyft and CNH Industrial
The main advantage of trading using opposite Shyft and CNH Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shyft 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 Shyft 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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