Correlation Between Caterpillar and Harmony Gold
Can any of the company-specific risk be diversified away by investing in both Caterpillar and Harmony Gold 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 Harmony Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and Harmony Gold Mining, you can compare the effects of market volatilities on Caterpillar and Harmony Gold 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 Harmony Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and Harmony Gold.
Diversification Opportunities for Caterpillar and Harmony Gold
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Caterpillar and Harmony is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and Harmony Gold Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harmony Gold Mining 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 Harmony Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harmony Gold Mining has no effect on the direction of Caterpillar i.e., Caterpillar and Harmony Gold go up and down completely randomly.
Pair Corralation between Caterpillar and Harmony Gold
Considering the 90-day investment horizon Caterpillar is expected to generate 3.47 times less return on investment than Harmony Gold. But when comparing it to its historical volatility, Caterpillar is 3.52 times less risky than Harmony Gold. It trades about 0.07 of its potential returns per unit of risk. Harmony Gold Mining is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 283.00 in Harmony Gold Mining on March 10, 2024 and sell it today you would earn a total of 580.00 from holding Harmony Gold Mining or generate 204.95% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 82.22% |
Values | Daily Returns |
Caterpillar vs. Harmony Gold Mining
Performance |
Timeline |
Caterpillar |
Harmony Gold Mining |
Caterpillar and Harmony Gold Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Caterpillar and Harmony Gold
The main advantage of trading using opposite Caterpillar and Harmony Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, Harmony Gold 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 Harmony Gold will offset losses from the drop in Harmony Gold's long position.Caterpillar vs. AGCO Corporation | Caterpillar vs. PACCAR Inc | Caterpillar vs. Deere Company | Caterpillar vs. Lindsay |
Harmony Gold vs. Osisko Mining | Harmony Gold vs. Almadex Minerals | Harmony Gold vs. Galiano Gold | Harmony Gold vs. US Gold Corp |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
Other Complementary Tools
Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals |