Correlation Between Caterpillar and Capitol Series
Can any of the company-specific risk be diversified away by investing in both Caterpillar and Capitol Series 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 Capitol Series into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and Capitol Series Trust, you can compare the effects of market volatilities on Caterpillar and Capitol Series 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 Capitol Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and Capitol Series.
Diversification Opportunities for Caterpillar and Capitol Series
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Caterpillar and Capitol is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and Capitol Series Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capitol Series 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 Capitol Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capitol Series Trust has no effect on the direction of Caterpillar i.e., Caterpillar and Capitol Series go up and down completely randomly.
Pair Corralation between Caterpillar and Capitol Series
Considering the 90-day investment horizon Caterpillar is expected to generate 1.29 times less return on investment than Capitol Series. In addition to that, Caterpillar is 2.07 times more volatile than Capitol Series Trust. It trades about 0.16 of its total potential returns per unit of risk. Capitol Series Trust is currently generating about 0.44 per unit of volatility. If you would invest 2,733 in Capitol Series Trust on September 1, 2024 and sell it today you would earn a total of 316.00 from holding Capitol Series Trust or generate 11.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Caterpillar vs. Capitol Series Trust
Performance |
| Timeline |
| Caterpillar |
| Capitol Series Trust |
Caterpillar and Capitol Series Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and Capitol Series
The main advantage of trading using opposite Caterpillar and Capitol Series positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, Capitol Series 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 Capitol Series will offset losses from the drop in Capitol Series' long position.| Caterpillar vs. AGCO Corporation | Caterpillar vs. Nikola Corp | Caterpillar vs. PACCAR Inc | Caterpillar vs. Deere Company |
| Capitol Series vs. WisdomTree Trust | Capitol Series vs. QRAFT AI Enhanced Large | Capitol Series vs. Northern Lights | Capitol Series vs. First Trust Exchange Traded |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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