Correlation Between CNH Industrial and Innovative Industrial
Can any of the company-specific risk be diversified away by investing in both CNH Industrial and Innovative 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 CNH Industrial and Innovative Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CNH Industrial NV and Innovative Industrial Properties, you can compare the effects of market volatilities on CNH Industrial and Innovative 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 CNH Industrial with a short position of Innovative Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of CNH Industrial and Innovative Industrial.
Diversification Opportunities for CNH Industrial and Innovative Industrial
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CNH and Innovative is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding CNH Industrial NV and Innovative Industrial Properti in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovative Industrial and CNH Industrial 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 CNH Industrial NV are associated (or correlated) with Innovative Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovative Industrial has no effect on the direction of CNH Industrial i.e., CNH Industrial and Innovative Industrial go up and down completely randomly.
Pair Corralation between CNH Industrial and Innovative Industrial
Assuming the 90 days trading horizon CNH Industrial NV is expected to generate 0.97 times more return on investment than Innovative Industrial. However, CNH Industrial NV is 1.03 times less risky than Innovative Industrial. It trades about 0.04 of its potential returns per unit of risk. Innovative Industrial Properties is currently generating about -0.24 per unit of risk. If you would invest 1,009 in CNH Industrial NV on September 25, 2024 and sell it today you would earn a total of 46.00 from holding CNH Industrial NV or generate 4.56% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
CNH Industrial NV vs. Innovative Industrial Properti
Performance |
Timeline |
CNH Industrial NV |
Innovative Industrial |
CNH Industrial and Innovative Industrial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with CNH Industrial and Innovative Industrial
The main advantage of trading using opposite CNH Industrial and Innovative Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CNH Industrial position performs unexpectedly, Innovative 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 Innovative Industrial will offset losses from the drop in Innovative Industrial's long position.CNH Industrial vs. Uniper SE | CNH Industrial vs. Mulberry Group PLC | CNH Industrial vs. London Security Plc | CNH Industrial vs. Triad Group PLC |
Innovative Industrial vs. Uniper SE | Innovative Industrial vs. Mulberry Group PLC | Innovative Industrial vs. London Security Plc | Innovative Industrial vs. Triad Group PLC |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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