Correlation Between Caterpillar and Gencor Industries
Can any of the company-specific risk be diversified away by investing in both Caterpillar and Gencor Industries 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 Gencor Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and Gencor Industries, you can compare the effects of market volatilities on Caterpillar and Gencor Industries 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 Gencor Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and Gencor Industries.
Diversification Opportunities for Caterpillar and Gencor Industries
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Caterpillar and Gencor is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and Gencor Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gencor Industries 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 Gencor Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gencor Industries has no effect on the direction of Caterpillar i.e., Caterpillar and Gencor Industries go up and down completely randomly.
Pair Corralation between Caterpillar and Gencor Industries
Considering the 90-day investment horizon Caterpillar is expected to generate 1.09 times less return on investment than Gencor Industries. But when comparing it to its historical volatility, Caterpillar is 1.12 times less risky than Gencor Industries. It trades about 0.12 of its potential returns per unit of risk. Gencor Industries is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,903 in Gencor Industries on September 12, 2024 and sell it today you would earn a total of 303.00 from holding Gencor Industries or generate 15.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caterpillar vs. Gencor Industries
Performance |
| Timeline |
| Caterpillar |
| Gencor Industries |
Caterpillar and Gencor Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and Gencor Industries
The main advantage of trading using opposite Caterpillar and Gencor Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, Gencor Industries 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 Gencor Industries will offset losses from the drop in Gencor Industries' long position.| Caterpillar vs. Victory Integrity Smallmid Cap | Caterpillar vs. Hilton Worldwide Holdings | Caterpillar vs. NVIDIA | Caterpillar vs. JPMorgan Chase Co |
| Gencor Industries vs. Victory Integrity Smallmid Cap | Gencor Industries vs. Hilton Worldwide Holdings | Gencor Industries vs. NVIDIA | Gencor Industries vs. JPMorgan Chase Co |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
Other Complementary Tools
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities |