Correlation Between Caterpillar and Gold79 Mines
Can any of the company-specific risk be diversified away by investing in both Caterpillar and Gold79 Mines 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 Gold79 Mines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and Gold79 Mines, you can compare the effects of market volatilities on Caterpillar and Gold79 Mines 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 Gold79 Mines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and Gold79 Mines.
Diversification Opportunities for Caterpillar and Gold79 Mines
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Caterpillar and Gold79 is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and Gold79 Mines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold79 Mines 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 Gold79 Mines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold79 Mines has no effect on the direction of Caterpillar i.e., Caterpillar and Gold79 Mines go up and down completely randomly.
Pair Corralation between Caterpillar and Gold79 Mines
Considering the 90-day investment horizon Caterpillar is expected to generate 4.39 times less return on investment than Gold79 Mines. But when comparing it to its historical volatility, Caterpillar is 4.9 times less risky than Gold79 Mines. It trades about 0.07 of its potential returns per unit of risk. Gold79 Mines is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 16.00 in Gold79 Mines on September 1, 2024 and sell it today you would earn a total of 8.00 from holding Gold79 Mines or generate 50.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.47% |
| Values | Daily Returns |
Caterpillar vs. Gold79 Mines
Performance |
| Timeline |
| Caterpillar |
| Gold79 Mines |
Caterpillar and Gold79 Mines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and Gold79 Mines
The main advantage of trading using opposite Caterpillar and Gold79 Mines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, Gold79 Mines 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 Gold79 Mines will offset losses from the drop in Gold79 Mines' long position.| Caterpillar vs. AGCO Corporation | Caterpillar vs. Nikola Corp | Caterpillar vs. PACCAR Inc | Caterpillar vs. Deere Company |
| Gold79 Mines vs. Arctic Star Exploration | Gold79 Mines vs. American Clean Resources | Gold79 Mines vs. Arras Minerals Corp | Gold79 Mines vs. American Creek Resources |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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