Correlation Between Caterpillar and ProShares Trust
Can any of the company-specific risk be diversified away by investing in both Caterpillar and ProShares Trust 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 ProShares Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and ProShares Trust , you can compare the effects of market volatilities on Caterpillar and ProShares Trust 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 ProShares Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and ProShares Trust.
Diversification Opportunities for Caterpillar and ProShares Trust
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Caterpillar and ProShares is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and ProShares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares 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 ProShares Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Trust has no effect on the direction of Caterpillar i.e., Caterpillar and ProShares Trust go up and down completely randomly.
Pair Corralation between Caterpillar and ProShares Trust
Considering the 90-day investment horizon Caterpillar is expected to under-perform the ProShares Trust. In addition to that, Caterpillar is 1.04 times more volatile than ProShares Trust . It trades about -0.21 of its total potential returns per unit of risk. ProShares Trust is currently generating about 0.22 per unit of volatility. If you would invest 2,119 in ProShares Trust on November 18, 2024 and sell it today you would earn a total of 171.00 from holding ProShares Trust or generate 8.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caterpillar vs. ProShares Trust
Performance |
| Timeline |
| Caterpillar |
| ProShares Trust |
Caterpillar and ProShares Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and ProShares Trust
The main advantage of trading using opposite Caterpillar and ProShares Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, ProShares Trust 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 ProShares Trust will offset losses from the drop in ProShares Trust's long position.| Caterpillar vs. AGCO Corporation | Caterpillar vs. Nikola Corp | Caterpillar vs. PACCAR Inc | Caterpillar vs. Deere Company |
| ProShares Trust vs. AXS TSLA Bear | ProShares Trust vs. Tuttle Capital Short | ProShares Trust vs. ProShares Bitcoin Strategy | ProShares Trust vs. ProShares UltraShort Bloomberg |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
Other Complementary Tools
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing |