Correlation Between Caterpillar and BlockchainK2 Corp
Can any of the company-specific risk be diversified away by investing in both Caterpillar and BlockchainK2 Corp 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 BlockchainK2 Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and BlockchainK2 Corp, you can compare the effects of market volatilities on Caterpillar and BlockchainK2 Corp 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 BlockchainK2 Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and BlockchainK2 Corp.
Diversification Opportunities for Caterpillar and BlockchainK2 Corp
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Caterpillar and BlockchainK2 is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and BlockchainK2 Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlockchainK2 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 BlockchainK2 Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlockchainK2 Corp has no effect on the direction of Caterpillar i.e., Caterpillar and BlockchainK2 Corp go up and down completely randomly.
Pair Corralation between Caterpillar and BlockchainK2 Corp
Considering the 90-day investment horizon Caterpillar is expected to generate 3.22 times less return on investment than BlockchainK2 Corp. But when comparing it to its historical volatility, Caterpillar is 7.05 times less risky than BlockchainK2 Corp. It trades about 0.12 of its potential returns per unit of risk. BlockchainK2 Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 8.30 in BlockchainK2 Corp on August 26, 2024 and sell it today you would earn a total of 1.50 from holding BlockchainK2 Corp or generate 18.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caterpillar vs. BlockchainK2 Corp
Performance |
| Timeline |
| Caterpillar |
| BlockchainK2 Corp |
Caterpillar and BlockchainK2 Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and BlockchainK2 Corp
The main advantage of trading using opposite Caterpillar and BlockchainK2 Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, BlockchainK2 Corp 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 BlockchainK2 Corp will offset losses from the drop in BlockchainK2 Corp's long position.| Caterpillar vs. AGCO Corporation | Caterpillar vs. Nikola Corp | Caterpillar vs. PACCAR Inc | Caterpillar vs. Deere Company |
| BlockchainK2 Corp vs. DeFi Technologies | BlockchainK2 Corp vs. Argo Blockchain PLC | BlockchainK2 Corp vs. DigiMax Global | BlockchainK2 Corp vs. Galaxy Digital Holdings |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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