Correlation Between Caterpillar and Bonanza Goldfields
Can any of the company-specific risk be diversified away by investing in both Caterpillar and Bonanza Goldfields 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 Bonanza Goldfields into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and Bonanza Goldfields, you can compare the effects of market volatilities on Caterpillar and Bonanza Goldfields 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 Bonanza Goldfields. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and Bonanza Goldfields.
Diversification Opportunities for Caterpillar and Bonanza Goldfields
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Caterpillar and Bonanza is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and Bonanza Goldfields in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bonanza Goldfields 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 Bonanza Goldfields. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bonanza Goldfields has no effect on the direction of Caterpillar i.e., Caterpillar and Bonanza Goldfields go up and down completely randomly.
Pair Corralation between Caterpillar and Bonanza Goldfields
If you would invest 36,037 in Caterpillar on October 20, 2024 and sell it today you would earn a total of 2,565 from holding Caterpillar or generate 7.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 5.0% |
| Values | Daily Returns |
Caterpillar vs. Bonanza Goldfields
Performance |
| Timeline |
| Caterpillar |
| Bonanza Goldfields |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Caterpillar and Bonanza Goldfields Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and Bonanza Goldfields
The main advantage of trading using opposite Caterpillar and Bonanza Goldfields positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, Bonanza Goldfields 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 Bonanza Goldfields will offset losses from the drop in Bonanza Goldfields' long position.| Caterpillar vs. AGCO Corporation | Caterpillar vs. Nikola Corp | Caterpillar vs. PACCAR Inc | Caterpillar vs. Deere Company |
| Bonanza Goldfields vs. Metallis Resources | Bonanza Goldfields vs. Macmahon Holdings Limited | Bonanza Goldfields vs. Prime Meridian Resources | Bonanza Goldfields vs. Mundoro Capital |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
Other Complementary Tools
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges |