Correlation Between KOMATSU and Caterpillar
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By analyzing existing cross correlation between KOMATSU LTD SPONS and Caterpillar, you can compare the effects of market volatilities on KOMATSU and Caterpillar 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 KOMATSU with a short position of Caterpillar. Check out your portfolio center. Please also check ongoing floating volatility patterns of KOMATSU and Caterpillar.
Diversification Opportunities for KOMATSU and Caterpillar
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between KOMATSU and Caterpillar is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding KOMATSU LTD SPONS and Caterpillar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caterpillar and KOMATSU 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 KOMATSU LTD SPONS are associated (or correlated) with Caterpillar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caterpillar has no effect on the direction of KOMATSU i.e., KOMATSU and Caterpillar go up and down completely randomly.
Pair Corralation between KOMATSU and Caterpillar
Assuming the 90 days trading horizon KOMATSU LTD SPONS is expected to generate 0.71 times more return on investment than Caterpillar. However, KOMATSU LTD SPONS is 1.41 times less risky than Caterpillar. It trades about 0.22 of its potential returns per unit of risk. Caterpillar is currently generating about -0.04 per unit of risk. If you would invest 2,620 in KOMATSU LTD SPONS on November 7, 2024 and sell it today you would earn a total of 180.00 from holding KOMATSU LTD SPONS or generate 6.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 86.96% |
| Values | Daily Returns |
KOMATSU LTD SPONS vs. Caterpillar
Performance |
| Timeline |
| KOMATSU LTD SPONS |
| Caterpillar |
KOMATSU and Caterpillar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KOMATSU and Caterpillar
The main advantage of trading using opposite KOMATSU and Caterpillar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KOMATSU position performs unexpectedly, Caterpillar 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 Caterpillar will offset losses from the drop in Caterpillar's long position.| KOMATSU vs. Addus HomeCare | KOMATSU vs. SALESFORCE INC CDR | KOMATSU vs. Focus Home Interactive | KOMATSU vs. Haverty Furniture Companies |
| Caterpillar vs. Caterpillar | Caterpillar vs. Deere Company | Caterpillar vs. AB Volvo | Caterpillar vs. VOLVO B UNSPADR |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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