Correlation Between Caterpillar and Titan International
Can any of the company-specific risk be diversified away by investing in both Caterpillar and Titan International 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 Titan International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and Titan International, you can compare the effects of market volatilities on Caterpillar and Titan International 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 Titan International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and Titan International.
Diversification Opportunities for Caterpillar and Titan International
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Caterpillar and Titan is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and Titan International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Titan International 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 Titan International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Titan International has no effect on the direction of Caterpillar i.e., Caterpillar and Titan International go up and down completely randomly.
Pair Corralation between Caterpillar and Titan International
Considering the 90-day investment horizon Caterpillar is expected to generate 0.59 times more return on investment than Titan International. However, Caterpillar is 1.7 times less risky than Titan International. It trades about 0.08 of its potential returns per unit of risk. Titan International is currently generating about -0.03 per unit of risk. If you would invest 22,017 in Caterpillar on August 27, 2024 and sell it today you would earn a total of 17,732 from holding Caterpillar or generate 80.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caterpillar vs. Titan International
Performance |
| Timeline |
| Caterpillar |
| Titan International |
Caterpillar and Titan International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and Titan International
The main advantage of trading using opposite Caterpillar and Titan International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, Titan International 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 Titan International will offset losses from the drop in Titan International's long position.| Caterpillar vs. Lion Electric Corp | Caterpillar vs. Xos Inc | Caterpillar vs. Hydrofarm Holdings Group | Caterpillar vs. AGCO Corporation |
| Titan International vs. Shyft Group | Titan International vs. Manitowoc | Titan International vs. Oshkosh | Titan International vs. Terex |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
Other Complementary Tools
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Fundamental Analysis View fundamental data based on most recent published financial statements |