Correlation Between CNH Industrial and Oshkosh

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

Diversification Opportunities for CNH Industrial and Oshkosh

0.92

Correlation Coefficient

CNH Industrial  Oshkosh

Almost no diversification

The 3 months correlation between CNH and Oshkosh is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding CNH Industrial NV and Oshkosh in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oshkosh 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 Oshkosh. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oshkosh has no effect on the direction of CNH Industrial i.e., CNH Industrial and Oshkosh go up and down completely randomly.

Pair Corralation between CNH Industrial and Oshkosh

Considering the 90-day investment horizon CNH Industrial is expected to generate 3.09 times less return on investment than Oshkosh. But when comparing it to its historical volatility, CNH Industrial NV is 1.19 times less risky than Oshkosh. It trades about 0.09 of its potential returns per unit of risk. Oshkosh is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  8,915  in Oshkosh on March 5, 2025 and sell it today you would earn a total of  914.00  from holding Oshkosh or generate 10.25% return on investment over 90 days.

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

CNH Industrial NV  vs.  Oshkosh

CNH Industrial NV

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CNH Industrial NV are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, CNH Industrial may actually be approaching a critical reversion point that can send shares even higher in July 2025.

Oshkosh

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Oshkosh are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Oshkosh may actually be approaching a critical reversion point that can send shares even higher in July 2025.

Pair Trading with CNH Industrial and Oshkosh

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

The idea behind CNH Industrial NV and Oshkosh 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.