Correlation Between Hyster Yale and CNH Industrial

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

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

Diversification Opportunities for Hyster Yale and CNH Industrial

0.44

Correlation Coefficient

Hyster Yale  CNH Industrial

Very weak diversification

The 3 months correlation between Hyster and CNH is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Hyster Yale Materials Handling 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 Hyster Yale 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 Hyster Yale Materials Handling 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 Hyster Yale i.e., Hyster Yale and CNH Industrial go up and down completely randomly.

Pair Corralation between Hyster Yale and CNH Industrial

Allowing for the 90-day total investment horizon Hyster Yale Materials Handling is expected to under-perform the CNH Industrial. In addition to that, Hyster Yale is 1.35 times more volatile than CNH Industrial NV. It trades about -0.27 of its total potential returns per unit of risk. CNH Industrial NV is currently generating about 0.0 per unit of volatility. If you would invest  1,097  in CNH Industrial NV on August 20, 2024 and sell it today you would lose (7.00) from holding CNH Industrial NV or give up 0.64% of portfolio value over 90 days.

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

Hyster Yale Materials Handling  vs.  CNH Industrial NV

Hyster Yale Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hyster Yale Materials Handling has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

CNH Industrial NV

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CNH Industrial NV are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, CNH Industrial may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Hyster Yale and CNH Industrial

The main advantage of trading using opposite Hyster Yale and CNH Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyster Yale 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 Hyster Yale Materials Handling 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.