Correlation Between Caterpillar and FISERV
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By analyzing existing cross correlation between Caterpillar and FISERV INC, you can compare the effects of market volatilities on Caterpillar and FISERV 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 FISERV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and FISERV.
Diversification Opportunities for Caterpillar and FISERV
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Caterpillar and FISERV is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and FISERV INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FISERV INC 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 FISERV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FISERV INC has no effect on the direction of Caterpillar i.e., Caterpillar and FISERV go up and down completely randomly.
Pair Corralation between Caterpillar and FISERV
Considering the 90-day investment horizon Caterpillar is expected to generate 4.37 times more return on investment than FISERV. However, Caterpillar is 4.37 times more volatile than FISERV INC. It trades about 0.13 of its potential returns per unit of risk. FISERV INC is currently generating about -0.17 per unit of risk. If you would invest 37,924 in Caterpillar on August 31, 2024 and sell it today you would earn a total of 2,446 from holding Caterpillar or generate 6.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caterpillar vs. FISERV INC
Performance |
| Timeline |
| Caterpillar |
| FISERV INC |
Caterpillar and FISERV Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and FISERV
The main advantage of trading using opposite Caterpillar and FISERV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, FISERV 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 FISERV will offset losses from the drop in FISERV's long position.| Caterpillar vs. Deere Company | Caterpillar vs. Lindsay | Caterpillar vs. Alamo Group | Caterpillar vs. Manitowoc |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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