Correlation Between Caterpillar and Intermap Technologies
Can any of the company-specific risk be diversified away by investing in both Caterpillar and Intermap Technologies 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 Intermap Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and Intermap Technologies Corp, you can compare the effects of market volatilities on Caterpillar and Intermap Technologies 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 Intermap Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and Intermap Technologies.
Diversification Opportunities for Caterpillar and Intermap Technologies
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Caterpillar and Intermap is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and Intermap Technologies Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intermap Technologies 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 Intermap Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intermap Technologies has no effect on the direction of Caterpillar i.e., Caterpillar and Intermap Technologies go up and down completely randomly.
Pair Corralation between Caterpillar and Intermap Technologies
Considering the 90-day investment horizon Caterpillar is expected to generate 4.24 times less return on investment than Intermap Technologies. But when comparing it to its historical volatility, Caterpillar is 2.48 times less risky than Intermap Technologies. It trades about 0.16 of its potential returns per unit of risk. Intermap Technologies Corp is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 90.00 in Intermap Technologies Corp on September 1, 2024 and sell it today you would earn a total of 33.00 from holding Intermap Technologies Corp or generate 36.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caterpillar vs. Intermap Technologies Corp
Performance |
| Timeline |
| Caterpillar |
| Intermap Technologies |
Caterpillar and Intermap Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and Intermap Technologies
The main advantage of trading using opposite Caterpillar and Intermap Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, Intermap Technologies 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 Intermap Technologies will offset losses from the drop in Intermap Technologies' long position.| Caterpillar vs. AGCO Corporation | Caterpillar vs. Nikola Corp | Caterpillar vs. PACCAR Inc | Caterpillar vs. Deere Company |
| Intermap Technologies vs. BCE Inc | Intermap Technologies vs. Axiologix | Intermap Technologies vs. Advanced Info Service | Intermap Technologies vs. HUMANA INC |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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