Correlation Between Caterpillar and Hartford Schroders
Can any of the company-specific risk be diversified away by investing in both Caterpillar and Hartford Schroders 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 Hartford Schroders into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and Hartford Schroders Smallmid, you can compare the effects of market volatilities on Caterpillar and Hartford Schroders 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 Hartford Schroders. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and Hartford Schroders.
Diversification Opportunities for Caterpillar and Hartford Schroders
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Caterpillar and Hartford is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and Hartford Schroders Smallmid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Schroders 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 Hartford Schroders. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Schroders has no effect on the direction of Caterpillar i.e., Caterpillar and Hartford Schroders go up and down completely randomly.
Pair Corralation between Caterpillar and Hartford Schroders
Considering the 90-day investment horizon Caterpillar is expected to generate 3.06 times more return on investment than Hartford Schroders. However, Caterpillar is 3.06 times more volatile than Hartford Schroders Smallmid. It trades about 0.16 of its potential returns per unit of risk. Hartford Schroders Smallmid is currently generating about 0.4 per unit of risk. If you would invest 37,620 in Caterpillar on September 1, 2024 and sell it today you would earn a total of 2,991 from holding Caterpillar or generate 7.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Caterpillar vs. Hartford Schroders Smallmid
Performance |
| Timeline |
| Caterpillar |
| Hartford Schroders |
Caterpillar and Hartford Schroders Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and Hartford Schroders
The main advantage of trading using opposite Caterpillar and Hartford Schroders positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, Hartford Schroders 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 Hartford Schroders will offset losses from the drop in Hartford Schroders' long position.| Caterpillar vs. AGCO Corporation | Caterpillar vs. Nikola Corp | Caterpillar vs. PACCAR Inc | Caterpillar vs. Deere Company |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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