Correlation Between Caterpillar and Hinto Energy
Can any of the company-specific risk be diversified away by investing in both Caterpillar and Hinto Energy 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 Hinto Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and Hinto Energy, you can compare the effects of market volatilities on Caterpillar and Hinto Energy 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 Hinto Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and Hinto Energy.
Diversification Opportunities for Caterpillar and Hinto Energy
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Caterpillar and Hinto is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and Hinto Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hinto Energy 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 Hinto Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hinto Energy has no effect on the direction of Caterpillar i.e., Caterpillar and Hinto Energy go up and down completely randomly.
Pair Corralation between Caterpillar and Hinto Energy
Considering the 90-day investment horizon Caterpillar is expected to under-perform the Hinto Energy. In addition to that, Caterpillar is 7.68 times more volatile than Hinto Energy. It trades about -0.06 of its total potential returns per unit of risk. Hinto Energy is currently generating about -0.15 per unit of volatility. If you would invest 1.37 in Hinto Energy on November 30, 2024 and sell it today you would lose (0.02) from holding Hinto Energy or give up 1.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 93.18% |
| Values | Daily Returns |
Caterpillar vs. Hinto Energy
Performance |
| Timeline |
| Caterpillar |
| Hinto Energy |
Caterpillar and Hinto Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and Hinto Energy
The main advantage of trading using opposite Caterpillar and Hinto Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, Hinto Energy 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 Hinto Energy will offset losses from the drop in Hinto Energy'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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
Other Complementary Tools
| Stocks Directory Find actively traded stocks across global markets | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world |