Correlation Between Caterpillar and Fiera Capital
Can any of the company-specific risk be diversified away by investing in both Caterpillar and Fiera Capital 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 Fiera Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and Fiera Capital, you can compare the effects of market volatilities on Caterpillar and Fiera Capital 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 Fiera Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and Fiera Capital.
Diversification Opportunities for Caterpillar and Fiera Capital
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Caterpillar and Fiera is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and Fiera Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fiera Capital 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 Fiera Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fiera Capital has no effect on the direction of Caterpillar i.e., Caterpillar and Fiera Capital go up and down completely randomly.
Pair Corralation between Caterpillar and Fiera Capital
Considering the 90-day investment horizon Caterpillar is expected to generate 2.17 times less return on investment than Fiera Capital. But when comparing it to its historical volatility, Caterpillar is 2.56 times less risky than Fiera Capital. It trades about 0.1 of its potential returns per unit of risk. Fiera Capital is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 377.00 in Fiera Capital on August 28, 2024 and sell it today you would earn a total of 323.00 from holding Fiera Capital or generate 85.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 66.38% |
| Values | Daily Returns |
Caterpillar vs. Fiera Capital
Performance |
| Timeline |
| Caterpillar |
| Fiera Capital |
Caterpillar and Fiera Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and Fiera Capital
The main advantage of trading using opposite Caterpillar and Fiera Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, Fiera Capital 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 Fiera Capital will offset losses from the drop in Fiera Capital's long position.| Caterpillar vs. Lion Electric Corp | Caterpillar vs. Xos Inc | Caterpillar vs. Hydrofarm Holdings Group | Caterpillar vs. AGCO Corporation |
| Fiera Capital vs. AGF Management Limited | Fiera Capital vs. Azimut Holding SpA | Fiera Capital vs. Ameritrans Capital Corp | Fiera Capital vs. Elysee Development Corp |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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