Correlation Between ALERION CLEANPOWER and CNH Industrial

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

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

Diversification Opportunities for ALERION CLEANPOWER and CNH Industrial

0.35

Correlation Coefficient

ALERION CLEANPOWER  CNH Industrial

Weak diversification

The 3 months correlation between ALERION and CNH is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding ALERION CLEANPOWER 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 ALERION CLEANPOWER 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 ALERION CLEANPOWER 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 ALERION CLEANPOWER i.e., ALERION CLEANPOWER and CNH Industrial go up and down completely randomly.

Pair Corralation between ALERION CLEANPOWER and CNH Industrial

Assuming the 90 days trading horizon ALERION CLEANPOWER is expected to generate 1.55 times more return on investment than CNH Industrial. However, ALERION CLEANPOWER is 1.55 times more volatile than CNH Industrial NV. It trades about 0.2 of its potential returns per unit of risk. CNH Industrial NV is currently generating about 0.1 per unit of risk. If you would invest  1,402  in ALERION CLEANPOWER on April 24, 2025 and sell it today you would earn a total of  738.00  from holding ALERION CLEANPOWER or generate 52.64% return on investment over 90 days.

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

ALERION CLEANPOWER  vs.  CNH Industrial NV

ALERION CLEANPOWER

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ALERION CLEANPOWER are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ALERION CLEANPOWER reported solid returns over the last few months and may actually be approaching a breakup point.

CNH Industrial NV

Risk-Adjusted Performance

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 nearly unsteady basic indicators, CNH Industrial reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ALERION CLEANPOWER and CNH Industrial

The main advantage of trading using opposite ALERION CLEANPOWER and CNH Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALERION CLEANPOWER 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 ALERION CLEANPOWER 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.