Correlation Between Caterpillar and Scout E
Can any of the company-specific risk be diversified away by investing in both Caterpillar and Scout E 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 Scout E into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and Scout E Bond, you can compare the effects of market volatilities on Caterpillar and Scout E 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 Scout E. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and Scout E.
Diversification Opportunities for Caterpillar and Scout E
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Caterpillar and Scout is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and Scout E Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scout E Bond 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 Scout E. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scout E Bond has no effect on the direction of Caterpillar i.e., Caterpillar and Scout E go up and down completely randomly.
Pair Corralation between Caterpillar and Scout E
Considering the 90-day investment horizon Caterpillar is expected to generate 3.79 times more return on investment than Scout E. However, Caterpillar is 3.79 times more volatile than Scout E Bond. It trades about 0.08 of its potential returns per unit of risk. Scout E Bond is currently generating about 0.02 per unit of risk. If you would invest 22,477 in Caterpillar on September 2, 2024 and sell it today you would earn a total of 18,134 from holding Caterpillar or generate 80.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 31.05% |
| Values | Daily Returns |
Caterpillar vs. Scout E Bond
Performance |
| Timeline |
| Caterpillar |
| Scout E Bond |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Caterpillar and Scout E Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and Scout E
The main advantage of trading using opposite Caterpillar and Scout E positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, Scout E 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 Scout E will offset losses from the drop in Scout E's long position.| Caterpillar vs. AGCO Corporation | Caterpillar vs. Nikola Corp | Caterpillar vs. PACCAR Inc | Caterpillar vs. Deere Company |
| Scout E vs. American Funds Strategic | Scout E vs. Baron Global Advantage | Scout E vs. Fidelity Intermediate Treasury | Scout E vs. American Funds Porate |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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