Correlation Between CNH Industrial and Arts Way

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

Diversification Opportunities for CNH Industrial and Arts Way

-0.53

Correlation Coefficient

CNH Industrial  Arts Way

Excellent diversification

The 3 months correlation between CNH and Arts is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding CNH Industrial NV and Arts Way Manufacturing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arts Way Manufacturing 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 Arts Way. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arts Way Manufacturing has no effect on the direction of CNH Industrial i.e., CNH Industrial and Arts Way go up and down completely randomly.

Pair Corralation between CNH Industrial and Arts Way

Considering the 90-day investment horizon CNH Industrial NV is expected to generate 0.25 times more return on investment than Arts Way. However, CNH Industrial NV is 4.07 times less risky than Arts Way. It trades about 0.1 of its potential returns per unit of risk. Arts Way Manufacturing Co is currently generating about 0.02 per unit of risk. If you would invest  1,127  in CNH Industrial NV on December 26, 2024 and sell it today you would earn a total of  138.00  from holding CNH Industrial NV or generate 12.24% return on investment over 90 days.

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

CNH Industrial NV  vs.  Arts Way Manufacturing Co

CNH Industrial NV

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CNH Industrial NV are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, CNH Industrial demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Arts Way Manufacturing

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Arts Way Manufacturing Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Arts Way may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with CNH Industrial and Arts Way

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

The idea behind CNH Industrial NV and Arts Way Manufacturing Co 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.