Correlation Between Archer Daniels and Caterpillar
Can any of the company-specific risk be diversified away by investing in both Archer Daniels 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 Archer Daniels and Caterpillar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Archer Daniels Midland and Caterpillar, you can compare the effects of market volatilities on Archer Daniels 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 Archer Daniels with a short position of Caterpillar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Archer Daniels and Caterpillar.
Diversification Opportunities for Archer Daniels and Caterpillar
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Archer and Caterpillar is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Archer Daniels Midland and Caterpillar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caterpillar and Archer Daniels 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 Archer Daniels Midland 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 Archer Daniels i.e., Archer Daniels and Caterpillar go up and down completely randomly.
Pair Corralation between Archer Daniels and Caterpillar
Considering the 90-day investment horizon Archer Daniels Midland is expected to generate 0.95 times more return on investment than Caterpillar. However, Archer Daniels Midland is 1.06 times less risky than Caterpillar. It trades about -0.04 of its potential returns per unit of risk. Caterpillar is currently generating about -0.05 per unit of risk. If you would invest 5,222 in Archer Daniels Midland on September 17, 2024 and sell it today you would lose (53.00) from holding Archer Daniels Midland or give up 1.01% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Archer Daniels Midland vs. Caterpillar
Performance |
Timeline |
Archer Daniels Midland |
Caterpillar |
Archer Daniels and Caterpillar Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Archer Daniels and Caterpillar
The main advantage of trading using opposite Archer Daniels and Caterpillar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Archer Daniels 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.Archer Daniels vs. Better Choice | Archer Daniels vs. Stryve Foods | Archer Daniels vs. Koios Beverage Corp | Archer Daniels vs. Bit Origin |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
Other Complementary Tools
Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
FinTech Suite Use AI to screen and filter profitable investment opportunities |