Correlation Between Lerøy Seafood and CNH Industrial
Can any of the company-specific risk be diversified away by investing in both Lerøy Seafood 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 Lerøy Seafood and CNH Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lery Seafood Group and CNH Industrial NV, you can compare the effects of market volatilities on Lerøy Seafood 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 Lerøy Seafood with a short position of CNH Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lerøy Seafood and CNH Industrial.
Diversification Opportunities for Lerøy Seafood and CNH Industrial
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lerøy and CNH is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Lery Seafood 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 Lerøy Seafood 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 Lery Seafood 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 Lerøy Seafood i.e., Lerøy Seafood and CNH Industrial go up and down completely randomly.
Pair Corralation between Lerøy Seafood and CNH Industrial
Assuming the 90 days horizon Lery Seafood Group is expected to generate 4.16 times more return on investment than CNH Industrial. However, Lerøy Seafood is 4.16 times more volatile than CNH Industrial NV. It trades about 0.06 of its potential returns per unit of risk. CNH Industrial NV is currently generating about -0.01 per unit of risk. If you would invest 92.00 in Lery Seafood Group on September 14, 2024 and sell it today you would earn a total of 342.00 from holding Lery Seafood Group or generate 371.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lery Seafood Group vs. CNH Industrial NV
Performance |
| Timeline |
| Lery Seafood Group |
| CNH Industrial NV |
Lerøy Seafood and CNH Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lerøy Seafood and CNH Industrial
The main advantage of trading using opposite Lerøy Seafood and CNH Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lerøy Seafood 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.| Lerøy Seafood vs. Hormel Foods | Lerøy Seafood vs. Superior Plus Corp | Lerøy Seafood vs. SIVERS SEMICONDUCTORS AB | Lerøy Seafood vs. NorAm Drilling AS |
| CNH Industrial vs. Burlington Stores | CNH Industrial vs. SPARTAN STORES | CNH Industrial vs. Collins Foods Limited | CNH Industrial vs. MOLSON RS BEVERAGE |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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