Correlation Between Caterpillar and HKT Trust
Can any of the company-specific risk be diversified away by investing in both Caterpillar and HKT Trust 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 HKT Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and HKT Trust and, you can compare the effects of market volatilities on Caterpillar and HKT Trust 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 HKT Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and HKT Trust.
Diversification Opportunities for Caterpillar and HKT Trust
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Caterpillar and HKT is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and HKT Trust and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HKT Trust 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 HKT Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HKT Trust has no effect on the direction of Caterpillar i.e., Caterpillar and HKT Trust go up and down completely randomly.
Pair Corralation between Caterpillar and HKT Trust
Considering the 90-day investment horizon Caterpillar is expected to under-perform the HKT Trust. But the stock apears to be less risky and, when comparing its historical volatility, Caterpillar is 14.57 times less risky than HKT Trust. The stock trades about -0.41 of its potential returns per unit of risk. The HKT Trust and is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 120.00 in HKT Trust and on November 29, 2024 and sell it today you would earn a total of 15.00 from holding HKT Trust and or generate 12.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caterpillar vs. HKT Trust and
Performance |
| Timeline |
| Caterpillar |
| HKT Trust |
Caterpillar and HKT Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and HKT Trust
The main advantage of trading using opposite Caterpillar and HKT Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, HKT Trust 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 HKT Trust will offset losses from the drop in HKT Trust's long position.| Caterpillar vs. Aquagold International | Caterpillar vs. Thrivent High Yield | Caterpillar vs. Morningstar Unconstrained Allocation | Caterpillar vs. Via Renewables |
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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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