Correlation Between FIRST SAVINGS and Caterpillar
Can any of the company-specific risk be diversified away by investing in both FIRST SAVINGS and Caterpillar 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 FIRST SAVINGS and Caterpillar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FIRST SAVINGS FINL and Caterpillar, you can compare the effects of market volatilities on FIRST SAVINGS and Caterpillar 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 FIRST SAVINGS with a short position of Caterpillar. Check out your portfolio center. Please also check ongoing floating volatility patterns of FIRST SAVINGS and Caterpillar.
Diversification Opportunities for FIRST SAVINGS and Caterpillar
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between FIRST and Caterpillar is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding FIRST SAVINGS FINL and Caterpillar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caterpillar and FIRST SAVINGS 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 FIRST SAVINGS FINL are associated (or correlated) with Caterpillar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caterpillar has no effect on the direction of FIRST SAVINGS i.e., FIRST SAVINGS and Caterpillar go up and down completely randomly.
Pair Corralation between FIRST SAVINGS and Caterpillar
Assuming the 90 days horizon FIRST SAVINGS FINL is expected to under-perform the Caterpillar. In addition to that, FIRST SAVINGS is 1.19 times more volatile than Caterpillar. It trades about -0.16 of its total potential returns per unit of risk. Caterpillar is currently generating about 0.06 per unit of volatility. If you would invest 35,118 in Caterpillar on November 3, 2024 and sell it today you would earn a total of 732.00 from holding Caterpillar or generate 2.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FIRST SAVINGS FINL vs. Caterpillar
Performance |
| Timeline |
| FIRST SAVINGS FINL |
| Caterpillar |
FIRST SAVINGS and Caterpillar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FIRST SAVINGS and Caterpillar
The main advantage of trading using opposite FIRST SAVINGS and Caterpillar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FIRST SAVINGS position performs unexpectedly, Caterpillar 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 Caterpillar will offset losses from the drop in Caterpillar's long position.| FIRST SAVINGS vs. SIDETRADE EO 1 | FIRST SAVINGS vs. TRADELINK ELECTRON | FIRST SAVINGS vs. Medical Properties Trust | FIRST SAVINGS vs. Inspire Medical Systems |
| Caterpillar vs. INVITATION HOMES DL | Caterpillar vs. Aedas Homes SA | Caterpillar vs. HAVERTY FURNITURE A | Caterpillar vs. Focus Home Interactive |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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