Correlation Between Caterpillar and Aperture Endeavour

Can any of the company-specific risk be diversified away by investing in both Caterpillar and Aperture Endeavour 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 Caterpillar and Aperture Endeavour into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Caterpillar and Aperture Endeavour Equity, you can compare the effects of market volatilities on Caterpillar and Aperture Endeavour 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 Aperture Endeavour. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and Aperture Endeavour.

Diversification Opportunities for Caterpillar and Aperture Endeavour

-0.57

Correlation Coefficient

Caterpillar  Aperture Endeavour

Excellent diversification

The 3 months correlation between Caterpillar and Aperture is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and Aperture Endeavour Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aperture Endeavour Equity 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 Aperture Endeavour. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aperture Endeavour Equity has no effect on the direction of Caterpillar i.e., Caterpillar and Aperture Endeavour go up and down completely randomly.

Pair Corralation between Caterpillar and Aperture Endeavour

If you would invest  1,287  in Aperture Endeavour Equity on October 12, 2024 and sell it today you would earn a total of  0.00  from holding Aperture Endeavour Equity or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	5.0%
Values	Daily Returns

Caterpillar  vs.  Aperture Endeavour Equity

Caterpillar

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Caterpillar has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Aperture Endeavour Equity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aperture Endeavour Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong primary indicators, Aperture Endeavour is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Caterpillar and Aperture Endeavour

The main advantage of trading using opposite Caterpillar and Aperture Endeavour positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, Aperture Endeavour 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 Aperture Endeavour will offset losses from the drop in Aperture Endeavour's long position.

The idea behind Caterpillar and Aperture Endeavour Equity pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.