Correlation Between Caterpillar and Ault Alliance
Can any of the company-specific risk be diversified away by investing in both Caterpillar and Ault Alliance 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 Ault Alliance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and Ault Alliance, you can compare the effects of market volatilities on Caterpillar and Ault Alliance 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 Ault Alliance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and Ault Alliance.
Diversification Opportunities for Caterpillar and Ault Alliance
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Caterpillar and Ault is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and Ault Alliance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ault Alliance 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 Ault Alliance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ault Alliance has no effect on the direction of Caterpillar i.e., Caterpillar and Ault Alliance go up and down completely randomly.
Pair Corralation between Caterpillar and Ault Alliance
If you would invest 37,652 in Caterpillar on September 3, 2024 and sell it today you would earn a total of 2,959 from holding Caterpillar or generate 7.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 5.0% |
| Values | Daily Returns |
Caterpillar vs. Ault Alliance
Performance |
| Timeline |
| Caterpillar |
| Ault Alliance |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
Caterpillar and Ault Alliance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and Ault Alliance
The main advantage of trading using opposite Caterpillar and Ault Alliance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, Ault Alliance 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 Ault Alliance will offset losses from the drop in Ault Alliance's long position.| Caterpillar vs. Partner Communications | Caterpillar vs. Merck Company | Caterpillar vs. Western Midstream Partners | Caterpillar vs. Edgewise Therapeutics |
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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