Correlation Between CNHI Old and Daimler Truck

Can any of the company-specific risk be diversified away by investing in both CNHI Old and Daimler Truck 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 CNHI Old and Daimler Truck into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CNHI Old and Daimler Truck Holding, you can compare the effects of market volatilities on CNHI Old and Daimler Truck 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 CNHI Old with a short position of Daimler Truck. Check out your portfolio center. Please also check ongoing floating volatility patterns of CNHI Old and Daimler Truck.

Diversification Opportunities for CNHI Old and Daimler Truck

0.0

Correlation Coefficient

CNHI Old  Daimler Truck

Pay attention - limited upside

The 3 months correlation between CNHI and Daimler is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding CNHI Old and Daimler Truck Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daimler Truck Holding and CNHI Old 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 CNHI Old are associated (or correlated) with Daimler Truck. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daimler Truck Holding has no effect on the direction of CNHI Old i.e., CNHI Old and Daimler Truck go up and down completely randomly.

Pair Corralation between CNHI Old and Daimler Truck

If you would invest  1,917  in Daimler Truck Holding on December 19, 2024 and sell it today you would earn a total of  303.00  from holding Daimler Truck Holding or generate 15.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

CNHI Old  vs.  Daimler Truck Holding

CNHI Old

Risk-Adjusted Performance

Very Weak

Over the last 90 days CNHI Old has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, CNHI Old is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Daimler Truck Holding

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Daimler Truck Holding are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Daimler Truck showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CNHI Old and Daimler Truck

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

The idea behind CNHI Old and Daimler Truck Holding 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.