Correlation Between Caterpillar and KION GROUP
Can any of the company-specific risk be diversified away by investing in both Caterpillar and KION GROUP 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 KION GROUP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and KION GROUP AG, you can compare the effects of market volatilities on Caterpillar and KION GROUP 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 KION GROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and KION GROUP.
Diversification Opportunities for Caterpillar and KION GROUP
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Caterpillar and KION is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and KION GROUP AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KION GROUP AG 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 KION GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KION GROUP AG has no effect on the direction of Caterpillar i.e., Caterpillar and KION GROUP go up and down completely randomly.
Pair Corralation between Caterpillar and KION GROUP
Considering the 90-day investment horizon Caterpillar is expected to generate 0.5 times more return on investment than KION GROUP. However, Caterpillar is 2.0 times less risky than KION GROUP. It trades about -0.04 of its potential returns per unit of risk. KION GROUP AG is currently generating about -0.05 per unit of risk. If you would invest 39,301 in Caterpillar on September 13, 2024 and sell it today you would lose (462.00) from holding Caterpillar or give up 1.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Caterpillar vs. KION GROUP AG
Performance |
| Timeline |
| Caterpillar |
| KION GROUP AG |
Caterpillar and KION GROUP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and KION GROUP
The main advantage of trading using opposite Caterpillar and KION GROUP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, KION GROUP 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 KION GROUP will offset losses from the drop in KION GROUP's long position.| Caterpillar vs. Aquagold International | Caterpillar vs. Thrivent High Yield | Caterpillar vs. Morningstar Unconstrained Allocation | Caterpillar vs. Via Renewables |
| KION GROUP vs. Caterpillar | KION GROUP vs. Deere Company | KION GROUP vs. Shyft Group | KION GROUP vs. Nikola Corp |
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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