Correlation Between Caterpillar and WIMFARM SA
Can any of the company-specific risk be diversified away by investing in both Caterpillar and WIMFARM SA 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 WIMFARM SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and WIMFARM SA EO, you can compare the effects of market volatilities on Caterpillar and WIMFARM SA 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 WIMFARM SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and WIMFARM SA.
Diversification Opportunities for Caterpillar and WIMFARM SA
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Caterpillar and WIMFARM is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and WIMFARM SA EO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WIMFARM SA EO 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 WIMFARM SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WIMFARM SA EO has no effect on the direction of Caterpillar i.e., Caterpillar and WIMFARM SA go up and down completely randomly.
Pair Corralation between Caterpillar and WIMFARM SA
Assuming the 90 days trading horizon Caterpillar is expected to generate 0.43 times more return on investment than WIMFARM SA. However, Caterpillar is 2.31 times less risky than WIMFARM SA. It trades about 0.05 of its potential returns per unit of risk. WIMFARM SA EO is currently generating about -0.03 per unit of risk. If you would invest 29,627 in Caterpillar on November 3, 2024 and sell it today you would earn a total of 6,223 from holding Caterpillar or generate 21.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caterpillar vs. WIMFARM SA EO
Performance |
| Timeline |
| Caterpillar |
| WIMFARM SA EO |
Caterpillar and WIMFARM SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and WIMFARM SA
The main advantage of trading using opposite Caterpillar and WIMFARM SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, WIMFARM SA 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 WIMFARM SA will offset losses from the drop in WIMFARM SA's long position.| Caterpillar vs. Moneysupermarket Group PLC | Caterpillar vs. PURE FOODS TASMANIA | Caterpillar vs. X FAB Silicon Foundries | Caterpillar vs. Cal Maine Foods |
| WIMFARM SA vs. CDL INVESTMENT | WIMFARM SA vs. Commercial Vehicle Group | WIMFARM SA vs. SEI INVESTMENTS | WIMFARM SA vs. CarsalesCom |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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