Correlation Between Caterpillar and Gardiner Healthcare
Can any of the company-specific risk be diversified away by investing in both Caterpillar and Gardiner Healthcare 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 Gardiner Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and Gardiner Healthcare Acquisitions, you can compare the effects of market volatilities on Caterpillar and Gardiner Healthcare 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 Gardiner Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and Gardiner Healthcare.
Diversification Opportunities for Caterpillar and Gardiner Healthcare
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Caterpillar and Gardiner is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and Gardiner Healthcare Acquisitio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gardiner Healthcare 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 Gardiner Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gardiner Healthcare has no effect on the direction of Caterpillar i.e., Caterpillar and Gardiner Healthcare go up and down completely randomly.
Pair Corralation between Caterpillar and Gardiner Healthcare
If you would invest 32,883 in Caterpillar on August 30, 2024 and sell it today you would earn a total of 7,487 from holding Caterpillar or generate 22.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 0.79% |
| Values | Daily Returns |
Caterpillar vs. Gardiner Healthcare Acquisitio
Performance |
| Timeline |
| Caterpillar |
| Gardiner Healthcare |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Caterpillar and Gardiner Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and Gardiner Healthcare
The main advantage of trading using opposite Caterpillar and Gardiner Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, Gardiner Healthcare 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 Gardiner Healthcare will offset losses from the drop in Gardiner Healthcare's long position.| 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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