Correlation Between Terex and CNH Industrial
Can any of the company-specific risk be diversified away by investing in both Terex 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 Terex and CNH Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Terex and CNH Industrial NV, you can compare the effects of market volatilities on Terex 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 Terex with a short position of CNH Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Terex and CNH Industrial.
Diversification Opportunities for Terex and CNH Industrial
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Terex and CNH is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Terex 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 Terex 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 Terex 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 Terex i.e., Terex and CNH Industrial go up and down completely randomly.
Pair Corralation between Terex and CNH Industrial
Considering the 90-day investment horizon Terex is expected to generate 0.98 times more return on investment than CNH Industrial. However, Terex is 1.02 times less risky than CNH Industrial. It trades about 0.03 of its potential returns per unit of risk. CNH Industrial NV is currently generating about -0.02 per unit of risk. If you would invest 4,363 in Terex on August 28, 2024 and sell it today you would earn a total of 1,239 from holding Terex or generate 28.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 65.86% |
| Values | Daily Returns |
Terex vs. CNH Industrial NV
Performance |
| Timeline |
| Terex |
| CNH Industrial NV |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Terex and CNH Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Terex and CNH Industrial
The main advantage of trading using opposite Terex and CNH Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Terex 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.| Terex vs. Lion Electric Corp | Terex vs. Xos Inc | Terex vs. Hydrofarm Holdings Group | Terex vs. AGCO Corporation |
| CNH Industrial vs. Deere Company | CNH Industrial vs. Lindsay | CNH Industrial vs. Alamo Group | CNH Industrial vs. Caterpillar |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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