Correlation Between Caterpillar and Axonic Strategic

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

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

Diversification Opportunities for Caterpillar and Axonic Strategic

-0.67

Correlation Coefficient

Caterpillar  Axonic Strategic

Excellent diversification

The 3 months correlation between Caterpillar and Axonic is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and Axonic Strategic Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axonic Strategic Income 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 Axonic Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axonic Strategic Income has no effect on the direction of Caterpillar i.e., Caterpillar and Axonic Strategic go up and down completely randomly.

Pair Corralation between Caterpillar and Axonic Strategic

Considering the 90-day investment horizon Caterpillar is expected to generate 8.59 times more return on investment than Axonic Strategic. However, Caterpillar is 8.59 times more volatile than Axonic Strategic Income. It trades about 0.3 of its potential returns per unit of risk. Axonic Strategic Income is currently generating about 0.1 per unit of risk. If you would invest  29,664  in Caterpillar on February 11, 2025 and sell it today you would earn a total of  2,898  from holding Caterpillar or generate 9.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Caterpillar  vs.  Axonic Strategic Income

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 latest inconsistent performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Axonic Strategic Income

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Axonic Strategic Income are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Axonic Strategic is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Caterpillar and Axonic Strategic

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

The idea behind Caterpillar and Axonic Strategic Income 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.