Correlation Between Caterpillar and 2023 EFT
Can any of the company-specific risk be diversified away by investing in both Caterpillar and 2023 EFT 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 2023 EFT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and 2023 EFT Series, you can compare the effects of market volatilities on Caterpillar and 2023 EFT 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 2023 EFT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and 2023 EFT.
Diversification Opportunities for Caterpillar and 2023 EFT
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Caterpillar and 2023 is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and 2023 EFT Series in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 2023 EFT Series 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 2023 EFT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 2023 EFT Series has no effect on the direction of Caterpillar i.e., Caterpillar and 2023 EFT go up and down completely randomly.
Pair Corralation between Caterpillar and 2023 EFT
Considering the 90-day investment horizon Caterpillar is expected to generate 1.9 times more return on investment than 2023 EFT. However, Caterpillar is 1.9 times more volatile than 2023 EFT Series. It trades about 0.1 of its potential returns per unit of risk. 2023 EFT Series is currently generating about 0.09 per unit of risk. If you would invest 32,883 in Caterpillar on September 1, 2024 and sell it today you would earn a total of 7,728 from holding Caterpillar or generate 23.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Caterpillar vs. 2023 EFT Series
Performance |
| Timeline |
| Caterpillar |
| 2023 EFT Series |
Caterpillar and 2023 EFT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and 2023 EFT
The main advantage of trading using opposite Caterpillar and 2023 EFT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, 2023 EFT 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 2023 EFT will offset losses from the drop in 2023 EFT's long position.| Caterpillar vs. AGCO Corporation | Caterpillar vs. Nikola Corp | Caterpillar vs. PACCAR Inc | Caterpillar vs. Deere Company |
| 2023 EFT vs. Vanguard Small Cap Value | 2023 EFT vs. Dimensional Targeted Value | 2023 EFT vs. SPDR SP 600 | 2023 EFT vs. Avantis Small Cap |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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