Correlation Between Caterpillar and 19123MAF0

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Can any of the company-specific risk be diversified away by investing in both Caterpillar and 19123MAF0 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 19123MAF0 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and CCEP 15 15 JAN 27, you can compare the effects of market volatilities on Caterpillar and 19123MAF0 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 19123MAF0. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and 19123MAF0.

Diversification Opportunities for Caterpillar and 19123MAF0

0.6
  Correlation Coefficient

Poor diversification

The 3 months correlation between Caterpillar and 19123MAF0 is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and CCEP 15 15 JAN 27 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CCEP 15 15 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 19123MAF0. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CCEP 15 15 has no effect on the direction of Caterpillar i.e., Caterpillar and 19123MAF0 go up and down completely randomly.

Pair Corralation between Caterpillar and 19123MAF0

Considering the 90-day investment horizon Caterpillar is expected to generate 2.28 times more return on investment than 19123MAF0. However, Caterpillar is 2.28 times more volatile than CCEP 15 15 JAN 27. It trades about 0.16 of its potential returns per unit of risk. CCEP 15 15 JAN 27 is currently generating about -0.29 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 Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy47.62%
ValuesDaily Returns

Caterpillar  vs.  CCEP 15 15 JAN 27

 Performance 
       Timeline  
Caterpillar 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Caterpillar are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Caterpillar unveiled solid returns over the last few months and may actually be approaching a breakup point.
CCEP 15 15 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days CCEP 15 15 JAN 27 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for CCEP 15 15 JAN 27 investors.

Caterpillar and 19123MAF0 Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Caterpillar and 19123MAF0

The main advantage of trading using opposite Caterpillar and 19123MAF0 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, 19123MAF0 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 19123MAF0 will offset losses from the drop in 19123MAF0's long position.
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The idea behind Caterpillar and CCEP 15 15 JAN 27 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.

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