Correlation Between CNH Industrial and GreenX Metals

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

Diversification Opportunities for CNH Industrial and GreenX Metals

-0.29

Correlation Coefficient

CNH Industrial  GreenX Metals

Very good diversification

The 3 months correlation between CNH and GreenX is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding CNH Industrial NV and GreenX Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GreenX Metals 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 GreenX Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GreenX Metals has no effect on the direction of CNH Industrial i.e., CNH Industrial and GreenX Metals go up and down completely randomly.

Pair Corralation between CNH Industrial and GreenX Metals

Assuming the 90 days trading horizon CNH Industrial is expected to generate 2.56 times less return on investment than GreenX Metals. But when comparing it to its historical volatility, CNH Industrial NV is 1.52 times less risky than GreenX Metals. It trades about 0.02 of its potential returns per unit of risk. GreenX Metals is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  3,400  in GreenX Metals on September 14, 2024 and sell it today you would earn a total of  50.00  from holding GreenX Metals or generate 1.47% 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.  GreenX Metals

CNH Industrial NV

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CNH Industrial NV are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, CNH Industrial is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

GreenX Metals

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GreenX Metals are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, GreenX Metals may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with CNH Industrial and GreenX Metals

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

The idea behind CNH Industrial NV and GreenX Metals 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.