Correlation Between Caterpillar and Aim Investment
Can any of the company-specific risk be diversified away by investing in both Caterpillar and Aim Investment 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 Aim Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and Aim Investment Secs, you can compare the effects of market volatilities on Caterpillar and Aim Investment 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 Aim Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and Aim Investment.
Diversification Opportunities for Caterpillar and Aim Investment
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Caterpillar and Aim is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and Aim Investment Secs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aim Investment Secs 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 Aim Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aim Investment Secs has no effect on the direction of Caterpillar i.e., Caterpillar and Aim Investment go up and down completely randomly.
Pair Corralation between Caterpillar and Aim Investment
If you would invest 37,924 in Caterpillar on August 31, 2024 and sell it today you would earn a total of 2,446 from holding Caterpillar or generate 6.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caterpillar vs. Aim Investment Secs
Performance |
| Timeline |
| Caterpillar |
| Aim Investment Secs |
Caterpillar and Aim Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and Aim Investment
The main advantage of trading using opposite Caterpillar and Aim Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, Aim Investment 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 Aim Investment will offset losses from the drop in Aim Investment's long position.| Caterpillar vs. Deere Company | Caterpillar vs. Lindsay | Caterpillar vs. Alamo Group | Caterpillar vs. Manitowoc |
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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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