Correlation Between Caterpillar and Celtic Plc
Can any of the company-specific risk be diversified away by investing in both Caterpillar and Celtic Plc 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 Celtic Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and Celtic plc, you can compare the effects of market volatilities on Caterpillar and Celtic Plc 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 Celtic Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and Celtic Plc.
Diversification Opportunities for Caterpillar and Celtic Plc
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Caterpillar and Celtic is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and Celtic plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Celtic plc 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 Celtic Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Celtic plc has no effect on the direction of Caterpillar i.e., Caterpillar and Celtic Plc go up and down completely randomly.
Pair Corralation between Caterpillar and Celtic Plc
Considering the 90-day investment horizon Caterpillar is expected to generate 0.71 times more return on investment than Celtic Plc. However, Caterpillar is 1.41 times less risky than Celtic Plc. It trades about 0.09 of its potential returns per unit of risk. Celtic plc is currently generating about 0.04 per unit of risk. If you would invest 38,751 in Caterpillar on August 30, 2024 and sell it today you would earn a total of 1,619 from holding Caterpillar or generate 4.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caterpillar vs. Celtic plc
Performance |
| Timeline |
| Caterpillar |
| Celtic plc |
Caterpillar and Celtic Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and Celtic Plc
The main advantage of trading using opposite Caterpillar and Celtic Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, Celtic Plc 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 Celtic Plc will offset losses from the drop in Celtic Plc's long position.| Caterpillar vs. AGCO Corporation | Caterpillar vs. Nikola Corp | Caterpillar vs. PACCAR Inc | Caterpillar vs. Deere Company |
| Celtic Plc vs. Warner Music Group | Celtic Plc vs. Live Nation Entertainment | Celtic Plc vs. Atlanta Braves Holdings, | Celtic Plc vs. Warner Bros Discovery |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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