Correlation Between Caterpillar and Sofina Société
Can any of the company-specific risk be diversified away by investing in both Caterpillar and Sofina Société 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 Sofina Société into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and Sofina Socit Anonyme, you can compare the effects of market volatilities on Caterpillar and Sofina Société 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 Sofina Société. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and Sofina Société.
Diversification Opportunities for Caterpillar and Sofina Société
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Caterpillar and Sofina is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and Sofina Socit Anonyme in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sofina Socit Anonyme 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 Sofina Société. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sofina Socit Anonyme has no effect on the direction of Caterpillar i.e., Caterpillar and Sofina Société go up and down completely randomly.
Pair Corralation between Caterpillar and Sofina Société
Considering the 90-day investment horizon Caterpillar is expected to generate 3.46 times more return on investment than Sofina Société. However, Caterpillar is 3.46 times more volatile than Sofina Socit Anonyme. It trades about 0.11 of its potential returns per unit of risk. Sofina Socit Anonyme is currently generating about -0.05 per unit of risk. If you would invest 32,694 in Caterpillar on September 3, 2024 and sell it today you would earn a total of 7,917 from holding Caterpillar or generate 24.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caterpillar vs. Sofina Socit Anonyme
Performance |
| Timeline |
| Caterpillar |
| Sofina Socit Anonyme |
Caterpillar and Sofina Société Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and Sofina Société
The main advantage of trading using opposite Caterpillar and Sofina Société positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, Sofina Société 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 Sofina Société will offset losses from the drop in Sofina Société's long position.| Caterpillar vs. Partner Communications | Caterpillar vs. Merck Company | Caterpillar vs. Western Midstream Partners | Caterpillar vs. Edgewise Therapeutics |
| Sofina Société vs. Marygold Companies | Sofina Société vs. Carbon Streaming Corp | Sofina Société vs. Arrowmark Financial Corp | Sofina Société vs. Patria Investments |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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