Correlation Between AB Volvo and Caterpillar
Can any of the company-specific risk be diversified away by investing in both AB Volvo 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 AB Volvo and Caterpillar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AB Volvo and Caterpillar, you can compare the effects of market volatilities on AB Volvo 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 AB Volvo with a short position of Caterpillar. Check out your portfolio center. Please also check ongoing floating volatility patterns of AB Volvo and Caterpillar.
Diversification Opportunities for AB Volvo and Caterpillar
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between VOL1 and Caterpillar is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding AB Volvo and Caterpillar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caterpillar and AB Volvo 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 AB Volvo 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 AB Volvo i.e., AB Volvo and Caterpillar go up and down completely randomly.
Pair Corralation between AB Volvo and Caterpillar
If you would invest 34,950 in Caterpillar on September 2, 2024 and sell it today you would earn a total of 3,600 from holding Caterpillar or generate 10.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
AB Volvo vs. Caterpillar
Performance |
| Timeline |
| AB Volvo |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Caterpillar |
AB Volvo and Caterpillar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AB Volvo and Caterpillar
The main advantage of trading using opposite AB Volvo and Caterpillar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AB Volvo 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.| AB Volvo vs. Flutter Entertainment PLC | AB Volvo vs. Natural Health Trends | AB Volvo vs. ATRYS HEALTH SA | AB Volvo vs. Live Nation Entertainment |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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