Correlation Between CNH Industrial and Centaur Media

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

Diversification Opportunities for CNH Industrial and Centaur Media

0.73

Correlation Coefficient

CNH Industrial  Centaur Media

Poor diversification

The 3 months correlation between CNH and Centaur is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding CNH Industrial NV and Centaur Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centaur Media 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 Centaur Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centaur Media has no effect on the direction of CNH Industrial i.e., CNH Industrial and Centaur Media go up and down completely randomly.

Pair Corralation between CNH Industrial and Centaur Media

Assuming the 90 days trading horizon CNH Industrial is expected to generate 1.82 times less return on investment than Centaur Media. In addition to that, CNH Industrial is 1.05 times more volatile than Centaur Media. It trades about 0.05 of its total potential returns per unit of risk. Centaur Media is currently generating about 0.1 per unit of volatility. If you would invest  2,300  in Centaur Media on December 30, 2024 and sell it today you would earn a total of  400.00  from holding Centaur Media or generate 17.39% return on investment over 90 days.

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

CNH Industrial NV  vs.  Centaur Media

CNH Industrial NV

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CNH Industrial NV are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, CNH Industrial may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Centaur Media

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Centaur Media are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Centaur Media exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CNH Industrial and Centaur Media

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

The idea behind CNH Industrial NV and Centaur Media 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.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.