Correlation Between Caterpillar and IShares MSCI
Can any of the company-specific risk be diversified away by investing in both Caterpillar and IShares MSCI 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 IShares MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and iShares MSCI Japan, you can compare the effects of market volatilities on Caterpillar and IShares MSCI 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 IShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and IShares MSCI.
Diversification Opportunities for Caterpillar and IShares MSCI
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Caterpillar and IShares is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and iShares MSCI Japan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI Japan 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 IShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI Japan has no effect on the direction of Caterpillar i.e., Caterpillar and IShares MSCI go up and down completely randomly.
Pair Corralation between Caterpillar and IShares MSCI
Considering the 90-day investment horizon Caterpillar is expected to generate 1.66 times more return on investment than IShares MSCI. However, Caterpillar is 1.66 times more volatile than iShares MSCI Japan. It trades about 0.08 of its potential returns per unit of risk. iShares MSCI Japan is currently generating about 0.07 per unit of risk. If you would invest 22,430 in Caterpillar on August 24, 2024 and sell it today you would earn a total of 17,319 from holding Caterpillar or generate 77.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caterpillar vs. iShares MSCI Japan
Performance |
| Timeline |
| Caterpillar |
| iShares MSCI Japan |
Caterpillar and IShares MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and IShares MSCI
The main advantage of trading using opposite Caterpillar and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, IShares MSCI 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 IShares MSCI will offset losses from the drop in IShares MSCI's long position.| Caterpillar vs. AGCO Corporation | Caterpillar vs. Nikola Corp | Caterpillar vs. PACCAR Inc | Caterpillar vs. Deere Company |
| IShares MSCI vs. iShares MSCI South | IShares MSCI vs. iShares MSCI Hong | IShares MSCI vs. iShares MSCI Taiwan | IShares MSCI vs. iShares MSCI Germany |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
Other Complementary Tools
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges |