Correlation Between Caterpillar and Wienerberger Baustoffindustri
Can any of the company-specific risk be diversified away by investing in both Caterpillar and Wienerberger Baustoffindustri 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 Wienerberger Baustoffindustri into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and Wienerberger Baustoffindustrie, you can compare the effects of market volatilities on Caterpillar and Wienerberger Baustoffindustri 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 Wienerberger Baustoffindustri. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and Wienerberger Baustoffindustri.
Diversification Opportunities for Caterpillar and Wienerberger Baustoffindustri
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Caterpillar and Wienerberger is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and Wienerberger Baustoffindustrie in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wienerberger Baustoffindustri 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 Wienerberger Baustoffindustri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wienerberger Baustoffindustri has no effect on the direction of Caterpillar i.e., Caterpillar and Wienerberger Baustoffindustri go up and down completely randomly.
Pair Corralation between Caterpillar and Wienerberger Baustoffindustri
Considering the 90-day investment horizon Caterpillar is expected to generate 0.5 times more return on investment than Wienerberger Baustoffindustri. However, Caterpillar is 2.0 times less risky than Wienerberger Baustoffindustri. It trades about 0.08 of its potential returns per unit of risk. Wienerberger Baustoffindustrie is currently generating about 0.04 per unit of risk. If you would invest 23,366 in Caterpillar on November 28, 2024 and sell it today you would earn a total of 10,870 from holding Caterpillar or generate 46.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.24% |
| Values | Daily Returns |
Caterpillar vs. Wienerberger Baustoffindustrie
Performance |
| Timeline |
| Caterpillar |
| Wienerberger Baustoffindustri |
Caterpillar and Wienerberger Baustoffindustri Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and Wienerberger Baustoffindustri
The main advantage of trading using opposite Caterpillar and Wienerberger Baustoffindustri positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, Wienerberger Baustoffindustri 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 Wienerberger Baustoffindustri will offset losses from the drop in Wienerberger Baustoffindustri's long position.| Caterpillar vs. Aquagold International | Caterpillar vs. Thrivent High Yield | Caterpillar vs. Morningstar Unconstrained Allocation | Caterpillar vs. Via Renewables |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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