Correlation Between Caterpillar and Ezenia
Can any of the company-specific risk be diversified away by investing in both Caterpillar and Ezenia 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 Ezenia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and Ezenia Inc, you can compare the effects of market volatilities on Caterpillar and Ezenia 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 Ezenia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and Ezenia.
Diversification Opportunities for Caterpillar and Ezenia
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Caterpillar and Ezenia is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and Ezenia Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ezenia Inc 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 Ezenia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ezenia Inc has no effect on the direction of Caterpillar i.e., Caterpillar and Ezenia go up and down completely randomly.
Pair Corralation between Caterpillar and Ezenia
Considering the 90-day investment horizon Caterpillar is expected to generate 2.67 times more return on investment than Ezenia. However, Caterpillar is 2.67 times more volatile than Ezenia Inc. It trades about 0.07 of its potential returns per unit of risk. Ezenia Inc is currently generating about 0.17 per unit of risk. If you would invest 22,910 in Caterpillar on September 12, 2024 and sell it today you would earn a total of 15,929 from holding Caterpillar or generate 69.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 6.67% |
| Values | Daily Returns |
Caterpillar vs. Ezenia Inc
Performance |
| Timeline |
| Caterpillar |
| Ezenia Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Caterpillar and Ezenia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and Ezenia
The main advantage of trading using opposite Caterpillar and Ezenia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, Ezenia 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 Ezenia will offset losses from the drop in Ezenia's long position.| Caterpillar vs. Victory Integrity Smallmid Cap | Caterpillar vs. Hilton Worldwide Holdings | Caterpillar vs. NVIDIA | Caterpillar vs. JPMorgan Chase Co |
| Ezenia vs. Knowles Cor | Ezenia vs. Comtech Telecommunications Corp | Ezenia vs. Sonim Technologies | Ezenia vs. Mobilicom Limited American |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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