Correlation Between Caterpillar and Abbey Capital
Can any of the company-specific risk be diversified away by investing in both Caterpillar and Abbey Capital 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 Abbey Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and Abbey Capital Futures, you can compare the effects of market volatilities on Caterpillar and Abbey Capital 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 Abbey Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and Abbey Capital.
Diversification Opportunities for Caterpillar and Abbey Capital
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Caterpillar and Abbey is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and Abbey Capital Futures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abbey Capital Futures 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 Abbey Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abbey Capital Futures has no effect on the direction of Caterpillar i.e., Caterpillar and Abbey Capital go up and down completely randomly.
Pair Corralation between Caterpillar and Abbey Capital
Considering the 90-day investment horizon Caterpillar is expected to generate 4.86 times more return on investment than Abbey Capital. However, Caterpillar is 4.86 times more volatile than Abbey Capital Futures. It trades about 0.08 of its potential returns per unit of risk. Abbey Capital Futures is currently generating about 0.01 per unit of risk. If you would invest 39,061 in Caterpillar on August 28, 2024 and sell it today you would earn a total of 1,504 from holding Caterpillar or generate 3.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caterpillar vs. Abbey Capital Futures
Performance |
| Timeline |
| Caterpillar |
| Abbey Capital Futures |
Caterpillar and Abbey Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and Abbey Capital
The main advantage of trading using opposite Caterpillar and Abbey Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, Abbey Capital 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 Abbey Capital will offset losses from the drop in Abbey Capital's long position.| Caterpillar vs. Lion Electric Corp | Caterpillar vs. Xos Inc | Caterpillar vs. Hydrofarm Holdings Group | Caterpillar vs. AGCO Corporation |
| Abbey Capital vs. Abbey Capital Multi | Abbey Capital vs. Vanguard 500 Index | Abbey Capital vs. Vanguard Target Retirement | Abbey Capital vs. Fidelity Balanced Fund |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
Other Complementary Tools
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation |