Correlation Between Caterpillar and Phunware
Can any of the company-specific risk be diversified away by investing in both Caterpillar and Phunware 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 Phunware into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and Phunware, you can compare the effects of market volatilities on Caterpillar and Phunware 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 Phunware. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and Phunware.
Diversification Opportunities for Caterpillar and Phunware
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Caterpillar and Phunware is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and Phunware in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phunware 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 Phunware. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phunware has no effect on the direction of Caterpillar i.e., Caterpillar and Phunware go up and down completely randomly.
Pair Corralation between Caterpillar and Phunware
Considering the 90-day investment horizon Caterpillar is expected to generate 0.19 times more return on investment than Phunware. However, Caterpillar is 5.28 times less risky than Phunware. It trades about 0.08 of its potential returns per unit of risk. Phunware is currently generating about -0.02 per unit of risk. If you would invest 22,271 in Caterpillar on August 29, 2024 and sell it today you would earn a total of 18,512 from holding Caterpillar or generate 83.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 29.84% |
| Values | Daily Returns |
Caterpillar vs. Phunware
Performance |
| Timeline |
| Caterpillar |
| Phunware |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Caterpillar and Phunware Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and Phunware
The main advantage of trading using opposite Caterpillar and Phunware positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, Phunware 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 Phunware will offset losses from the drop in Phunware's long position.| Caterpillar vs. AGCO Corporation | Caterpillar vs. Nikola Corp | Caterpillar vs. PACCAR Inc | Caterpillar vs. Deere Company |
| Phunware vs. Amkor Technology | Phunware vs. Lipocine | Phunware vs. Western Digital | Phunware vs. PACCAR 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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