Correlation Between Caterpillar and Augusta Gold
Can any of the company-specific risk be diversified away by investing in both Caterpillar and Augusta 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 Augusta Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and Augusta Gold Corp, you can compare the effects of market volatilities on Caterpillar and Augusta 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 Augusta Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and Augusta Gold.
Diversification Opportunities for Caterpillar and Augusta Gold
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Caterpillar and Augusta is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and Augusta Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Augusta Gold Corp 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 Augusta Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Augusta Gold Corp has no effect on the direction of Caterpillar i.e., Caterpillar and Augusta Gold go up and down completely randomly.
Pair Corralation between Caterpillar and Augusta Gold
Considering the 90-day investment horizon Caterpillar is expected to generate 0.34 times more return on investment than Augusta Gold. However, Caterpillar is 2.98 times less risky than Augusta Gold. It trades about 0.08 of its potential returns per unit of risk. Augusta Gold Corp is currently generating about 0.0 per unit of risk. If you would invest 22,271 in Caterpillar on August 29, 2024 and sell it today you would earn a total of 18,099 from holding Caterpillar or generate 81.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caterpillar vs. Augusta Gold Corp
Performance |
| Timeline |
| Caterpillar |
| Augusta Gold Corp |
Caterpillar and Augusta Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and Augusta Gold
The main advantage of trading using opposite Caterpillar and Augusta Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, Augusta 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 Augusta Gold will offset losses from the drop in Augusta Gold's long position.| Caterpillar vs. AGCO Corporation | Caterpillar vs. Nikola Corp | Caterpillar vs. PACCAR Inc | Caterpillar vs. Deere Company |
| Augusta Gold vs. Vertiv Holdings Co | Augusta Gold vs. Nasdaq Inc | Augusta Gold vs. McDonalds | Augusta Gold vs. Walmart |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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