Correlation Between Smithson Investment and CNH Industrial
Can any of the company-specific risk be diversified away by investing in both Smithson Investment 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 Smithson Investment and CNH Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smithson Investment Trust and CNH Industrial NV, you can compare the effects of market volatilities on Smithson Investment 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 Smithson Investment with a short position of CNH Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smithson Investment and CNH Industrial.
Diversification Opportunities for Smithson Investment and CNH Industrial
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Smithson and CNH is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Smithson Investment Trust 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 Smithson Investment 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 Smithson Investment Trust 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 Smithson Investment i.e., Smithson Investment and CNH Industrial go up and down completely randomly.
Pair Corralation between Smithson Investment and CNH Industrial
Assuming the 90 days trading horizon Smithson Investment is expected to generate 1.47 times less return on investment than CNH Industrial. But when comparing it to its historical volatility, Smithson Investment Trust is 2.52 times less risky than CNH Industrial. It trades about 0.01 of its potential returns per unit of risk. CNH Industrial NV is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1,389 in CNH Industrial NV on October 30, 2024 and sell it today you would lose (150.00) from holding CNH Industrial NV or give up 10.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 92.99% |
| Values | Daily Returns |
Smithson Investment Trust vs. CNH Industrial NV
Performance |
| Timeline |
| Smithson Investment Trust |
| CNH Industrial NV |
Smithson Investment and CNH Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smithson Investment and CNH Industrial
The main advantage of trading using opposite Smithson Investment and CNH Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smithson Investment 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.| Smithson Investment vs. Tata Steel Limited | Smithson Investment vs. Ecclesiastical Insurance Office | Smithson Investment vs. Impax Environmental Markets | Smithson Investment vs. Geely Automobile Holdings |
| CNH Industrial vs. Advanced Medical Solutions | CNH Industrial vs. Kaufman Et Broad | CNH Industrial vs. Waste Management | CNH Industrial vs. Jupiter Fund Management |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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