Correlation Between Caterpillar and GN Store
Can any of the company-specific risk be diversified away by investing in both Caterpillar and GN Store 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 GN Store into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and GN Store Nord, you can compare the effects of market volatilities on Caterpillar and GN Store 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 GN Store. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and GN Store.
Diversification Opportunities for Caterpillar and GN Store
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Caterpillar and GNNDY is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and GN Store Nord in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GN Store Nord 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 GN Store. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GN Store Nord has no effect on the direction of Caterpillar i.e., Caterpillar and GN Store go up and down completely randomly.
Pair Corralation between Caterpillar and GN Store
Considering the 90-day investment horizon Caterpillar is expected to generate 1.36 times more return on investment than GN Store. However, Caterpillar is 1.36 times more volatile than GN Store Nord. It trades about 0.16 of its potential returns per unit of risk. GN Store Nord is currently generating about -0.04 per unit of risk. If you would invest 37,620 in Caterpillar on September 1, 2024 and sell it today you would earn a total of 2,991 from holding Caterpillar or generate 7.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Caterpillar vs. GN Store Nord
Performance |
| Timeline |
| Caterpillar |
| GN Store Nord |
Caterpillar and GN Store Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and GN Store
The main advantage of trading using opposite Caterpillar and GN Store positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, GN Store 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 GN Store will offset losses from the drop in GN Store's long position.| Caterpillar vs. AGCO Corporation | Caterpillar vs. Nikola Corp | Caterpillar vs. PACCAR Inc | Caterpillar vs. Deere Company |
| GN Store vs. Demant AS ADR | GN Store vs. Sonova Holding AG | GN Store vs. GN Store Nord | GN Store vs. Bone Biologics 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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