Correlation Between Caterpillar and BlackRock Total
Can any of the company-specific risk be diversified away by investing in both Caterpillar and BlackRock Total 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 BlackRock Total into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and BlackRock Total Return, you can compare the effects of market volatilities on Caterpillar and BlackRock Total 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 BlackRock Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and BlackRock Total.
Diversification Opportunities for Caterpillar and BlackRock Total
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Caterpillar and BlackRock is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and BlackRock Total Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock Total Return 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 BlackRock Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock Total Return has no effect on the direction of Caterpillar i.e., Caterpillar and BlackRock Total go up and down completely randomly.
Pair Corralation between Caterpillar and BlackRock Total
Considering the 90-day investment horizon Caterpillar is expected to generate 5.27 times more return on investment than BlackRock Total. However, Caterpillar is 5.27 times more volatile than BlackRock Total Return. It trades about 0.11 of its potential returns per unit of risk. BlackRock Total Return is currently generating about 0.03 per unit of risk. If you would invest 20,498 in Caterpillar on August 26, 2024 and sell it today you would earn a total of 19,251 from holding Caterpillar or generate 93.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 60.66% |
| Values | Daily Returns |
Caterpillar vs. BlackRock Total Return
Performance |
| Timeline |
| Caterpillar |
| BlackRock Total Return |
Caterpillar and BlackRock Total Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and BlackRock Total
The main advantage of trading using opposite Caterpillar and BlackRock Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, BlackRock Total 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 BlackRock Total will offset losses from the drop in BlackRock Total's long position.| Caterpillar vs. AGCO Corporation | Caterpillar vs. Nikola Corp | Caterpillar vs. PACCAR Inc | Caterpillar vs. Deere Company |
| BlackRock Total vs. First Trust Exchange Traded | BlackRock Total vs. Vanguard Intermediate Term Treasury | BlackRock Total vs. Vanguard Long Term Treasury | BlackRock Total vs. Vanguard Short Term Treasury |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
Other Complementary Tools
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets |