Correlation Between Caterpillar and Evotec SE
Can any of the company-specific risk be diversified away by investing in both Caterpillar and Evotec SE 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 Caterpillar and Evotec SE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and Evotec SE, you can compare the effects of market volatilities on Caterpillar and Evotec SE 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 Caterpillar with a short position of Evotec SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and Evotec SE.
Diversification Opportunities for Caterpillar and Evotec SE
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Caterpillar and Evotec is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and Evotec SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evotec SE and Caterpillar 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 Caterpillar are associated (or correlated) with Evotec SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evotec SE has no effect on the direction of Caterpillar i.e., Caterpillar and Evotec SE go up and down completely randomly.
Pair Corralation between Caterpillar and Evotec SE
If you would invest 38,751 in Caterpillar on August 30, 2024 and sell it today you would earn a total of 1,619 from holding Caterpillar or generate 4.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caterpillar vs. Evotec SE
Performance |
| Timeline |
| Caterpillar |
| Evotec SE |
Caterpillar and Evotec SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and Evotec SE
The main advantage of trading using opposite Caterpillar and Evotec SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, Evotec SE 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 Evotec SE will offset losses from the drop in Evotec SE's long position.| Caterpillar vs. AGCO Corporation | Caterpillar vs. Nikola Corp | Caterpillar vs. PACCAR Inc | Caterpillar vs. Deere Company |
| Evotec SE vs. Pacira BioSciences, | Evotec SE vs. Collegium Pharmaceutical | Evotec SE vs. Prestige Brand Holdings | Evotec SE vs. Phibro Animal Health |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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