Correlation Between Caterpillar and Juniata Valley
Can any of the company-specific risk be diversified away by investing in both Caterpillar and Juniata Valley 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 Juniata Valley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and Juniata Valley Financial, you can compare the effects of market volatilities on Caterpillar and Juniata Valley 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 Juniata Valley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and Juniata Valley.
Diversification Opportunities for Caterpillar and Juniata Valley
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Caterpillar and Juniata is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and Juniata Valley Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Juniata Valley Financial 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 Juniata Valley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Juniata Valley Financial has no effect on the direction of Caterpillar i.e., Caterpillar and Juniata Valley go up and down completely randomly.
Pair Corralation between Caterpillar and Juniata Valley
Considering the 90-day investment horizon Caterpillar is expected to generate 1.87 times less return on investment than Juniata Valley. In addition to that, Caterpillar is 1.32 times more volatile than Juniata Valley Financial. It trades about 0.05 of its total potential returns per unit of risk. Juniata Valley Financial is currently generating about 0.11 per unit of volatility. If you would invest 1,201 in Juniata Valley Financial on August 27, 2024 and sell it today you would earn a total of 49.00 from holding Juniata Valley Financial or generate 4.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caterpillar vs. Juniata Valley Financial
Performance |
| Timeline |
| Caterpillar |
| Juniata Valley Financial |
Caterpillar and Juniata Valley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and Juniata Valley
The main advantage of trading using opposite Caterpillar and Juniata Valley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, Juniata Valley 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 Juniata Valley will offset losses from the drop in Juniata Valley's long position.| Caterpillar vs. Lion Electric Corp | Caterpillar vs. Xos Inc | Caterpillar vs. Hydrofarm Holdings Group | Caterpillar vs. AGCO Corporation |
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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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