Correlation Between CNH Industrial and Team Internet

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

Diversification Opportunities for CNH Industrial and Team Internet

0.28

Correlation Coefficient

CNH Industrial  Team Internet

Modest diversification

The 3 months correlation between CNH and Team is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding CNH Industrial NV and Team Internet Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Team Internet Group 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 Team Internet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Team Internet Group has no effect on the direction of CNH Industrial i.e., CNH Industrial and Team Internet go up and down completely randomly.

Pair Corralation between CNH Industrial and Team Internet

Assuming the 90 days trading horizon CNH Industrial is expected to generate 3.17 times less return on investment than Team Internet. But when comparing it to its historical volatility, CNH Industrial NV is 1.19 times less risky than Team Internet. It trades about 0.04 of its potential returns per unit of risk. Team Internet Group is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  8,100  in Team Internet Group on November 29, 2024 and sell it today you would earn a total of  2,000  from holding Team Internet Group or generate 24.69% 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.  Team Internet Group

CNH Industrial NV

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CNH Industrial NV are ranked lower than 2 (%) 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 March 2025.

Team Internet Group

Risk-Adjusted Performance

OK

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

Pair Trading with CNH Industrial and Team Internet

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

The idea behind CNH Industrial NV and Team Internet Group 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.