Correlation Between Caterpillar and Bright Health
Can any of the company-specific risk be diversified away by investing in both Caterpillar and Bright Health 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 Bright Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and Bright Health Group, you can compare the effects of market volatilities on Caterpillar and Bright Health 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 Bright Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and Bright Health.
Diversification Opportunities for Caterpillar and Bright Health
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Caterpillar and Bright is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and Bright Health Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bright Health Group 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 Bright Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bright Health Group has no effect on the direction of Caterpillar i.e., Caterpillar and Bright Health go up and down completely randomly.
Pair Corralation between Caterpillar and Bright Health
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 | 4.76% |
| Values | Daily Returns |
Caterpillar vs. Bright Health Group
Performance |
| Timeline |
| Caterpillar |
| Bright Health Group |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Caterpillar and Bright Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and Bright Health
The main advantage of trading using opposite Caterpillar and Bright Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, Bright Health 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 Bright Health will offset losses from the drop in Bright Health's long position.| Caterpillar vs. Lion Electric Corp | Caterpillar vs. Xos Inc | Caterpillar vs. Hydrofarm Holdings Group | Caterpillar vs. AGCO Corporation |
| Bright Health vs. Alignment Healthcare LLC | Bright Health vs. Molina Healthcare | Bright Health vs. Clover Health Investments | Bright Health vs. Centene Corp |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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