Correlation Between Caterpillar and Janus Henderson

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

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

Diversification Opportunities for Caterpillar and Janus Henderson

0.0

Correlation Coefficient

Caterpillar  Janus Henderson

Pay attention - limited upside

The 3 months correlation between Caterpillar and Janus is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and Janus Henderson in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Janus Henderson 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 Janus Henderson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Janus Henderson has no effect on the direction of Caterpillar i.e., Caterpillar and Janus Henderson go up and down completely randomly.

Pair Corralation between Caterpillar and Janus Henderson

If you would invest  36,578  in Caterpillar on October 27, 2024 and sell it today you would earn a total of  4,185  from holding Caterpillar or generate 11.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	5.26%
Values	Daily Returns

Caterpillar  vs.  Janus Henderson

Caterpillar

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Caterpillar are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Caterpillar is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Janus Henderson

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Janus Henderson has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Janus Henderson is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Caterpillar and Janus Henderson

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

The idea behind Caterpillar and Janus Henderson 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.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.