Correlation Between Oshkosh and Caterpillar
Can any of the company-specific risk be diversified away by investing in both Oshkosh and Caterpillar 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 Oshkosh and Caterpillar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oshkosh and Caterpillar, you can compare the effects of market volatilities on Oshkosh 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 Oshkosh with a short position of Caterpillar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oshkosh and Caterpillar.
Diversification Opportunities for Oshkosh and Caterpillar
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Oshkosh and Caterpillar is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Oshkosh and Caterpillar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caterpillar and Oshkosh 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 Oshkosh 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 Oshkosh i.e., Oshkosh and Caterpillar go up and down completely randomly.
Pair Corralation between Oshkosh and Caterpillar
Considering the 90-day investment horizon Oshkosh is expected to generate 2.02 times more return on investment than Caterpillar. However, Oshkosh is 2.02 times more volatile than Caterpillar. It trades about 0.27 of its potential returns per unit of risk. Caterpillar is currently generating about 0.1 per unit of risk. If you would invest 9,357 in Oshkosh on November 3, 2024 and sell it today you would earn a total of 2,283 from holding Oshkosh or generate 24.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Oshkosh vs. Caterpillar
Performance |
| Timeline |
| Oshkosh |
| Caterpillar |
Oshkosh and Caterpillar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oshkosh and Caterpillar
The main advantage of trading using opposite Oshkosh and Caterpillar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oshkosh 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.| Oshkosh vs. Terex | Oshkosh vs. Astec Industries | Oshkosh vs. Hyster Yale Materials Handling | Oshkosh vs. Manitowoc |
| Caterpillar vs. AGCO Corporation | Caterpillar vs. Nikola Corp | Caterpillar vs. PACCAR Inc | Caterpillar vs. Deere Company |
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.
Other Complementary Tools
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. |