Correlation Between Caterpillar and KOMATSU
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By analyzing existing cross correlation between Caterpillar and KOMATSU LTD SPONS, you can compare the effects of market volatilities on Caterpillar and KOMATSU 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 KOMATSU. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and KOMATSU.
Diversification Opportunities for Caterpillar and KOMATSU
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Caterpillar and KOMATSU is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and KOMATSU LTD SPONS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KOMATSU LTD SPONS 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 KOMATSU. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KOMATSU LTD SPONS has no effect on the direction of Caterpillar i.e., Caterpillar and KOMATSU go up and down completely randomly.
Pair Corralation between Caterpillar and KOMATSU
Assuming the 90 days trading horizon Caterpillar is expected to generate 0.81 times more return on investment than KOMATSU. However, Caterpillar is 1.23 times less risky than KOMATSU. It trades about 0.1 of its potential returns per unit of risk. KOMATSU LTD SPONS is currently generating about 0.0 per unit of risk. If you would invest 31,239 in Caterpillar on August 28, 2024 and sell it today you would earn a total of 7,361 from holding Caterpillar or generate 23.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caterpillar vs. KOMATSU LTD SPONS
Performance |
| Timeline |
| Caterpillar |
| KOMATSU LTD SPONS |
Caterpillar and KOMATSU Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and KOMATSU
The main advantage of trading using opposite Caterpillar and KOMATSU positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, KOMATSU 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 KOMATSU will offset losses from the drop in KOMATSU's long position.| Caterpillar vs. Superior Plus Corp | Caterpillar vs. NMI Holdings | Caterpillar vs. Origin Agritech | Caterpillar vs. SIVERS SEMICONDUCTORS AB |
| KOMATSU vs. Superior Plus Corp | KOMATSU vs. NMI Holdings | KOMATSU vs. Origin Agritech | KOMATSU vs. SIVERS SEMICONDUCTORS AB |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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