Correlation Between CNH Industrial and Sysco Corp

Can any of the company-specific risk be diversified away by investing in both CNH Industrial and Sysco Corp 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 Sysco Corp 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 Sysco Corp, you can compare the effects of market volatilities on CNH Industrial and Sysco Corp 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 Sysco Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of CNH Industrial and Sysco Corp.

Diversification Opportunities for CNH Industrial and Sysco Corp

0.3

Correlation Coefficient

CNH Industrial  Sysco Corp

Weak diversification

The 3 months correlation between CNH and Sysco is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding CNH Industrial NV and Sysco Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sysco Corp 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 Sysco Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sysco Corp has no effect on the direction of CNH Industrial i.e., CNH Industrial and Sysco Corp go up and down completely randomly.

Pair Corralation between CNH Industrial and Sysco Corp

Assuming the 90 days trading horizon CNH Industrial NV is expected to generate 2.81 times more return on investment than Sysco Corp. However, CNH Industrial is 2.81 times more volatile than Sysco Corp. It trades about 0.05 of its potential returns per unit of risk. Sysco Corp is currently generating about 0.09 per unit of risk. If you would invest  971.00  in CNH Industrial NV on September 19, 2024 and sell it today you would earn a total of  74.00  from holding CNH Industrial NV or generate 7.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

CNH Industrial NV  vs.  Sysco Corp

CNH Industrial NV

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CNH Industrial NV are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, CNH Industrial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Sysco Corp

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sysco Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Sysco Corp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with CNH Industrial and Sysco Corp

The main advantage of trading using opposite CNH Industrial and Sysco Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CNH Industrial position performs unexpectedly, Sysco Corp 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 Sysco Corp will offset losses from the drop in Sysco Corp's long position.

The idea behind CNH Industrial NV and Sysco Corp 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.

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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..