Correlation Between CNH Industrial and Xos

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

Diversification Opportunities for CNH Industrial and Xos

0.25

Correlation Coefficient

CNH Industrial  Xos

Modest diversification

The 3 months correlation between CNH and Xos is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding CNH Industrial NV and Xos Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xos Inc 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 Xos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xos Inc has no effect on the direction of CNH Industrial i.e., CNH Industrial and Xos go up and down completely randomly.

Pair Corralation between CNH Industrial and Xos

If you would invest  1,145  in CNH Industrial NV on September 19, 2024 and sell it today you would earn a total of  0.00  from holding CNH Industrial NV or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	4.55%
Values	Daily Returns

CNH Industrial NV  vs.  Xos Inc

CNH Industrial NV

Risk-Adjusted Performance

0 of 100

Very Weak

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

Xos Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xos Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with CNH Industrial and Xos

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

The idea behind CNH Industrial NV and Xos Inc 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.