Correlation Between Caterpillar and Forian
Can any of the company-specific risk be diversified away by investing in both Caterpillar and Forian 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 Forian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and Forian Inc, you can compare the effects of market volatilities on Caterpillar and Forian 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 Forian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and Forian.
Diversification Opportunities for Caterpillar and Forian
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Caterpillar and Forian is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and Forian Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Forian Inc 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 Forian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Forian Inc has no effect on the direction of Caterpillar i.e., Caterpillar and Forian go up and down completely randomly.
Pair Corralation between Caterpillar and Forian
Considering the 90-day investment horizon Caterpillar is expected to generate 0.35 times more return on investment than Forian. However, Caterpillar is 2.86 times less risky than Forian. It trades about 0.19 of its potential returns per unit of risk. Forian Inc is currently generating about 0.06 per unit of risk. If you would invest 43,170 in Caterpillar on July 26, 2025 and sell it today you would earn a total of 8,880 from holding Caterpillar or generate 20.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.44% |
| Values | Daily Returns |
Caterpillar vs. Forian Inc
Performance |
| Timeline |
| Caterpillar |
| Forian Inc |
Caterpillar and Forian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and Forian
The main advantage of trading using opposite Caterpillar and Forian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, Forian 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 Forian will offset losses from the drop in Forian's long position.| Caterpillar vs. Deere Company | Caterpillar vs. Raytheon Technologies Corp | Caterpillar vs. Eaton PLC | Caterpillar vs. GE Aerospace |
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.
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