Correlation Between Caterpillar and Sysorex
Can any of the company-specific risk be diversified away by investing in both Caterpillar and Sysorex 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 Sysorex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and Sysorex, you can compare the effects of market volatilities on Caterpillar and Sysorex 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 Sysorex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and Sysorex.
Diversification Opportunities for Caterpillar and Sysorex
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Caterpillar and Sysorex is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and Sysorex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sysorex 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 Sysorex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sysorex has no effect on the direction of Caterpillar i.e., Caterpillar and Sysorex go up and down completely randomly.
Pair Corralation between Caterpillar and Sysorex
Considering the 90-day investment horizon Caterpillar is expected to generate 52.26 times less return on investment than Sysorex. But when comparing it to its historical volatility, Caterpillar is 49.12 times less risky than Sysorex. It trades about 0.08 of its potential returns per unit of risk. Sysorex is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 100.00 in Sysorex on August 29, 2024 and sell it today you would lose (99.99) from holding Sysorex or give up 99.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 96.57% |
| Values | Daily Returns |
Caterpillar vs. Sysorex
Performance |
| Timeline |
| Caterpillar |
| Sysorex |
Caterpillar and Sysorex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and Sysorex
The main advantage of trading using opposite Caterpillar and Sysorex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, Sysorex 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 Sysorex will offset losses from the drop in Sysorex's 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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