Correlation Between Caterpillar and High Liner
Can any of the company-specific risk be diversified away by investing in both Caterpillar and High Liner 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 High Liner into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and High Liner Foods, you can compare the effects of market volatilities on Caterpillar and High Liner 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 High Liner. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and High Liner.
Diversification Opportunities for Caterpillar and High Liner
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Caterpillar and High is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and High Liner Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Liner Foods 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 High Liner. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Liner Foods has no effect on the direction of Caterpillar i.e., Caterpillar and High Liner go up and down completely randomly.
Pair Corralation between Caterpillar and High Liner
Considering the 90-day investment horizon Caterpillar is expected to generate 4.11 times less return on investment than High Liner. In addition to that, Caterpillar is 1.57 times more volatile than High Liner Foods. It trades about 0.03 of its total potential returns per unit of risk. High Liner Foods is currently generating about 0.19 per unit of volatility. If you would invest 973.00 in High Liner Foods on August 24, 2024 and sell it today you would earn a total of 59.00 from holding High Liner Foods or generate 6.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Caterpillar vs. High Liner Foods
Performance |
| Timeline |
| Caterpillar |
| High Liner Foods |
Caterpillar and High Liner Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and High Liner
The main advantage of trading using opposite Caterpillar and High Liner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, High Liner 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 High Liner will offset losses from the drop in High Liner's long position.| Caterpillar vs. AGCO Corporation | Caterpillar vs. Nikola Corp | Caterpillar vs. PACCAR Inc | Caterpillar vs. Deere Company |
| High Liner vs. Grupo Bimbo SAB | High Liner vs. Lamb Weston Holdings | High Liner vs. Kellanova | High Liner vs. Premier Foods Plc |
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.
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