Correlation Between Caterpillar and Harrow Health

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

By analyzing existing cross correlation between Caterpillar and Harrow Health 8625, you can compare the effects of market volatilities on Caterpillar and Harrow Health 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 Harrow Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and Harrow Health.

Diversification Opportunities for Caterpillar and Harrow Health

-0.38

Correlation Coefficient

Caterpillar  Harrow Health

Very good diversification

The 3 months correlation between Caterpillar and Harrow is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and Harrow Health 8625 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harrow Health 8625 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 Harrow Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harrow Health 8625 has no effect on the direction of Caterpillar i.e., Caterpillar and Harrow Health go up and down completely randomly.

Pair Corralation between Caterpillar and Harrow Health

Considering the 90-day investment horizon Caterpillar is expected to under-perform the Harrow Health. In addition to that, Caterpillar is 4.77 times more volatile than Harrow Health 8625. It trades about -0.17 of its total potential returns per unit of risk. Harrow Health 8625 is currently generating about 0.09 per unit of volatility. If you would invest  2,485  in Harrow Health 8625 on December 1, 2024 and sell it today you would earn a total of  44.00  from holding Harrow Health 8625 or generate 1.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Caterpillar  vs.  Harrow Health 8625

Caterpillar

Risk-Adjusted Performance

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 weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Harrow Health 8625

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Harrow Health 8625 are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Harrow Health is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Caterpillar and Harrow Health

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

The idea behind Caterpillar and Harrow Health 8625 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.