Correlation Between Caterpillar and Hino Motors
Can any of the company-specific risk be diversified away by investing in both Caterpillar and Hino Motors 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 Hino Motors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and Hino Motors Ltd, you can compare the effects of market volatilities on Caterpillar and Hino Motors 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 Hino Motors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and Hino Motors.
Diversification Opportunities for Caterpillar and Hino Motors
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Caterpillar and Hino is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and Hino Motors Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hino Motors 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 Hino Motors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hino Motors has no effect on the direction of Caterpillar i.e., Caterpillar and Hino Motors go up and down completely randomly.
Pair Corralation between Caterpillar and Hino Motors
Considering the 90-day investment horizon Caterpillar is expected to generate 0.4 times more return on investment than Hino Motors. However, Caterpillar is 2.48 times less risky than Hino Motors. It trades about -0.44 of its potential returns per unit of risk. Hino Motors Ltd is currently generating about -0.22 per unit of risk. If you would invest 39,498 in Caterpillar on November 28, 2024 and sell it today you would lose (5,230) from holding Caterpillar or give up 13.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Caterpillar vs. Hino Motors Ltd
Performance |
| Timeline |
| Caterpillar |
| Hino Motors |
Caterpillar and Hino Motors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and Hino Motors
The main advantage of trading using opposite Caterpillar and Hino Motors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, Hino Motors 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 Hino Motors will offset losses from the drop in Hino Motors' long position.| Caterpillar vs. Aquagold International | Caterpillar vs. Thrivent High Yield | Caterpillar vs. Morningstar Unconstrained Allocation | Caterpillar vs. Via Renewables |
| Hino Motors vs. Daimler Truck Holding | Hino Motors vs. Volvo AB ADR | Hino Motors vs. Columbus McKinnon | Hino Motors vs. Hyster Yale Materials Handling |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
Other Complementary Tools
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences |