Correlation Between Caterpillar and Hawaiian Electric
Can any of the company-specific risk be diversified away by investing in both Caterpillar and Hawaiian Electric 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 Hawaiian Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and Hawaiian Electric, you can compare the effects of market volatilities on Caterpillar and Hawaiian Electric 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 Hawaiian Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and Hawaiian Electric.
Diversification Opportunities for Caterpillar and Hawaiian Electric
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Caterpillar and Hawaiian is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and Hawaiian Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hawaiian Electric 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 Hawaiian Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hawaiian Electric has no effect on the direction of Caterpillar i.e., Caterpillar and Hawaiian Electric go up and down completely randomly.
Pair Corralation between Caterpillar and Hawaiian Electric
If you would invest 33,836 in Caterpillar on September 12, 2024 and sell it today you would earn a total of 5,051 from holding Caterpillar or generate 14.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 25.0% |
| Values | Daily Returns |
Caterpillar vs. Hawaiian Electric
Performance |
| Timeline |
| Caterpillar |
| Hawaiian Electric |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Caterpillar and Hawaiian Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and Hawaiian Electric
The main advantage of trading using opposite Caterpillar and Hawaiian Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, Hawaiian Electric 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 Hawaiian Electric will offset losses from the drop in Hawaiian Electric's long position.| Caterpillar vs. Aquagold International | Caterpillar vs. Thrivent High Yield | Caterpillar vs. Morningstar Unconstrained Allocation | Caterpillar vs. Via Renewables |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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