Correlation Between Metso Outotec and Caterpillar
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By analyzing existing cross correlation between Metso Outotec Oyj and Caterpillar, you can compare the effects of market volatilities on Metso Outotec and Caterpillar 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 Metso Outotec with a short position of Caterpillar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metso Outotec and Caterpillar.
Diversification Opportunities for Metso Outotec and Caterpillar
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Metso and Caterpillar is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Metso Outotec Oyj and Caterpillar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caterpillar and Metso Outotec 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 Metso Outotec Oyj are associated (or correlated) with Caterpillar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caterpillar has no effect on the direction of Metso Outotec i.e., Metso Outotec and Caterpillar go up and down completely randomly.
Pair Corralation between Metso Outotec and Caterpillar
Assuming the 90 days horizon Metso Outotec Oyj is expected to generate 1.01 times more return on investment than Caterpillar. However, Metso Outotec is 1.01 times more volatile than Caterpillar. It trades about 0.05 of its potential returns per unit of risk. Caterpillar is currently generating about 0.05 per unit of risk. If you would invest 841.00 in Metso Outotec Oyj on September 23, 2024 and sell it today you would earn a total of 45.00 from holding Metso Outotec Oyj or generate 5.35% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Metso Outotec Oyj vs. Caterpillar
Performance |
Timeline |
Metso Outotec Oyj |
Caterpillar |
Metso Outotec and Caterpillar Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Metso Outotec and Caterpillar
The main advantage of trading using opposite Metso Outotec and Caterpillar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metso Outotec position performs unexpectedly, Caterpillar 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 Caterpillar will offset losses from the drop in Caterpillar's long position.Metso Outotec vs. Caterpillar | Metso Outotec vs. Caterpillar | Metso Outotec vs. Deere Company | Metso Outotec vs. AB Volvo |
Caterpillar vs. Caterpillar | Caterpillar vs. Deere Company | Caterpillar vs. AB Volvo | Caterpillar vs. VOLVO B UNSPADR |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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