Correlation Between Rogers Communications and CNH Industrial

Can any of the company-specific risk be diversified away by investing in both Rogers Communications and CNH Industrial 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 Rogers Communications and CNH Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Rogers Communications and CNH Industrial NV, you can compare the effects of market volatilities on Rogers Communications and CNH Industrial 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 Rogers Communications with a short position of CNH Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rogers Communications and CNH Industrial.

Diversification Opportunities for Rogers Communications and CNH Industrial

-0.7

Correlation Coefficient

Rogers Communications  CNH Industrial

Excellent diversification

The 3 months correlation between Rogers and CNH is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Rogers Communications and CNH Industrial NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CNH Industrial NV and Rogers Communications 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 Rogers Communications are associated (or correlated) with CNH Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CNH Industrial NV has no effect on the direction of Rogers Communications i.e., Rogers Communications and CNH Industrial go up and down completely randomly.

Pair Corralation between Rogers Communications and CNH Industrial

Assuming the 90 days trading horizon Rogers Communications is expected to under-perform the CNH Industrial. But the stock apears to be less risky and, when comparing its historical volatility, Rogers Communications is 1.95 times less risky than CNH Industrial. The stock trades about -0.04 of its potential returns per unit of risk. The CNH Industrial NV is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  935.00  in CNH Industrial NV on September 3, 2024 and sell it today you would earn a total of  227.00  from holding CNH Industrial NV or generate 24.28% return on investment over 90 days.

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

Rogers Communications  vs.  CNH Industrial NV

Rogers Communications

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rogers Communications has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's forward indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

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. In spite of rather unsteady fundamental indicators, CNH Industrial exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Rogers Communications and CNH Industrial

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

The idea behind Rogers Communications and CNH Industrial NV 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 Global Correlations module to find global opportunities by holding instruments from different markets.