Correlation Between CNH Industrial and Zumtobel Group

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

Diversification Opportunities for CNH Industrial and Zumtobel Group

-0.71

Correlation Coefficient

CNH Industrial  Zumtobel Group

Pay attention - limited upside

The 3 months correlation between CNH and Zumtobel is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding CNH Industrial NV and Zumtobel Group AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zumtobel Group AG 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 Zumtobel Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zumtobel Group AG has no effect on the direction of CNH Industrial i.e., CNH Industrial and Zumtobel Group go up and down completely randomly.

Pair Corralation between CNH Industrial and Zumtobel Group

Assuming the 90 days trading horizon CNH Industrial NV is expected to generate 2.58 times more return on investment than Zumtobel Group. However, CNH Industrial is 2.58 times more volatile than Zumtobel Group AG. It trades about 0.21 of its potential returns per unit of risk. Zumtobel Group AG is currently generating about -0.36 per unit of risk. If you would invest  1,032  in CNH Industrial NV on September 5, 2024 and sell it today you would earn a total of  152.00  from holding CNH Industrial NV or generate 14.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.65%
Values	Daily Returns

CNH Industrial NV  vs.  Zumtobel Group AG

CNH Industrial NV

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CNH Industrial NV are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, CNH Industrial demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Zumtobel Group AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zumtobel Group AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with CNH Industrial and Zumtobel Group

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

The idea behind CNH Industrial NV and Zumtobel Group AG 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.