Correlation Between Caterpillar and CIBT Education
Can any of the company-specific risk be diversified away by investing in both Caterpillar and CIBT Education 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 CIBT Education into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and CIBT Education Group, you can compare the effects of market volatilities on Caterpillar and CIBT Education 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 CIBT Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and CIBT Education.
Diversification Opportunities for Caterpillar and CIBT Education
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Caterpillar and CIBT is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and CIBT Education Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CIBT Education Group 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 CIBT Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CIBT Education Group has no effect on the direction of Caterpillar i.e., Caterpillar and CIBT Education go up and down completely randomly.
Pair Corralation between Caterpillar and CIBT Education
Considering the 90-day investment horizon Caterpillar is expected to generate 222.86 times less return on investment than CIBT Education. But when comparing it to its historical volatility, Caterpillar is 81.68 times less risky than CIBT Education. It trades about 0.08 of its potential returns per unit of risk. CIBT Education Group is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 5.60 in CIBT Education Group on September 2, 2024 and sell it today you would lose (4.16) from holding CIBT Education Group or give up 74.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 89.92% |
| Values | Daily Returns |
Caterpillar vs. CIBT Education Group
Performance |
| Timeline |
| Caterpillar |
| CIBT Education Group |
Caterpillar and CIBT Education Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and CIBT Education
The main advantage of trading using opposite Caterpillar and CIBT Education positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, CIBT Education 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 CIBT Education will offset losses from the drop in CIBT Education's long position.| Caterpillar vs. AGCO Corporation | Caterpillar vs. Nikola Corp | Caterpillar vs. PACCAR Inc | Caterpillar vs. Deere Company |
| CIBT Education vs. ATA Creativity Global | CIBT Education vs. American Public Education | CIBT Education vs. Skillful Craftsman Education | CIBT Education vs. China Liberal Education |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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