Correlation Between Austin Engineering and Caterpillar
Can any of the company-specific risk be diversified away by investing in both Austin Engineering 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 Austin Engineering and Caterpillar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Austin Engineering Limited and Caterpillar, you can compare the effects of market volatilities on Austin Engineering 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 Austin Engineering with a short position of Caterpillar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Austin Engineering and Caterpillar.
Diversification Opportunities for Austin Engineering and Caterpillar
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Austin and Caterpillar is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Austin Engineering Limited and Caterpillar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caterpillar and Austin Engineering 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 Austin Engineering Limited 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 Austin Engineering i.e., Austin Engineering and Caterpillar go up and down completely randomly.
Pair Corralation between Austin Engineering and Caterpillar
If you would invest 38,573 in Caterpillar on August 24, 2024 and sell it today you would earn a total of 1,176 from holding Caterpillar or generate 3.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Austin Engineering Limited vs. Caterpillar
Performance |
| Timeline |
| Austin Engineering |
| Caterpillar |
Austin Engineering and Caterpillar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Austin Engineering and Caterpillar
The main advantage of trading using opposite Austin Engineering and Caterpillar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Austin Engineering 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.| Austin Engineering vs. Lion Electric Corp | Austin Engineering vs. Nikola Corp | Austin Engineering vs. Buhler Industries | Austin Engineering vs. Toyota Industries |
| Caterpillar vs. AGCO Corporation | Caterpillar vs. Nikola Corp | Caterpillar vs. PACCAR Inc | Caterpillar vs. Deere Company |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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