Correlation Between CNH Industrial and AT S

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

Diversification Opportunities for CNH Industrial and AT S

-0.8

Correlation Coefficient

CNH Industrial  AT S

Pay attention - limited upside

The 3 months correlation between CNH and ATS is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding CNH Industrial NV and AT S Austria in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AT S Austria 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 AT S. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AT S Austria has no effect on the direction of CNH Industrial i.e., CNH Industrial and AT S go up and down completely randomly.

Pair Corralation between CNH Industrial and AT S

Assuming the 90 days trading horizon CNH Industrial NV is expected to generate 0.72 times more return on investment than AT S. However, CNH Industrial NV is 1.38 times less risky than AT S. It trades about -0.02 of its potential returns per unit of risk. AT S Austria is currently generating about -0.05 per unit of risk. If you would invest  1,532  in CNH Industrial NV on September 14, 2024 and sell it today you would lose (411.00) from holding CNH Industrial NV or give up 26.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

CNH Industrial NV  vs.  AT S Austria

CNH Industrial NV

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CNH Industrial NV are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, CNH Industrial demonstrated solid returns over the last few months and may actually be approaching a breakup point.

AT S Austria

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AT S Austria has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with CNH Industrial and AT S

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

The idea behind CNH Industrial NV and AT S Austria 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.