Correlation Between Caterpillar and Macquarie ETF
Can any of the company-specific risk be diversified away by investing in both Caterpillar and Macquarie ETF 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 Macquarie ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and Macquarie ETF Trust, you can compare the effects of market volatilities on Caterpillar and Macquarie ETF 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 Macquarie ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and Macquarie ETF.
Diversification Opportunities for Caterpillar and Macquarie ETF
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Caterpillar and Macquarie is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and Macquarie ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macquarie ETF Trust 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 Macquarie ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macquarie ETF Trust has no effect on the direction of Caterpillar i.e., Caterpillar and Macquarie ETF go up and down completely randomly.
Pair Corralation between Caterpillar and Macquarie ETF
Considering the 90-day investment horizon Caterpillar is expected to generate 2.97 times more return on investment than Macquarie ETF. However, Caterpillar is 2.97 times more volatile than Macquarie ETF Trust. It trades about 0.05 of its potential returns per unit of risk. Macquarie ETF Trust is currently generating about -0.15 per unit of risk. If you would invest 39,061 in Caterpillar on August 27, 2024 and sell it today you would earn a total of 688.00 from holding Caterpillar or generate 1.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caterpillar vs. Macquarie ETF Trust
Performance |
| Timeline |
| Caterpillar |
| Macquarie ETF Trust |
Caterpillar and Macquarie ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and Macquarie ETF
The main advantage of trading using opposite Caterpillar and Macquarie ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, Macquarie ETF 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 Macquarie ETF will offset losses from the drop in Macquarie ETF's long position.| Caterpillar vs. Lion Electric Corp | Caterpillar vs. Xos Inc | Caterpillar vs. Hydrofarm Holdings Group | Caterpillar vs. AGCO Corporation |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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