Correlation Between Caterpillar and Dalrada Financial
Can any of the company-specific risk be diversified away by investing in both Caterpillar and Dalrada Financial 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 Dalrada Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and Dalrada Financial Corp, you can compare the effects of market volatilities on Caterpillar and Dalrada Financial 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 Dalrada Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and Dalrada Financial.
Diversification Opportunities for Caterpillar and Dalrada Financial
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Caterpillar and Dalrada is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and Dalrada Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dalrada Financial Corp 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 Dalrada Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dalrada Financial Corp has no effect on the direction of Caterpillar i.e., Caterpillar and Dalrada Financial go up and down completely randomly.
Pair Corralation between Caterpillar and Dalrada Financial
Considering the 90-day investment horizon Caterpillar is expected to generate 0.17 times more return on investment than Dalrada Financial. However, Caterpillar is 5.94 times less risky than Dalrada Financial. It trades about 0.09 of its potential returns per unit of risk. Dalrada Financial Corp is currently generating about -0.01 per unit of risk. If you would invest 39,061 in Caterpillar on August 28, 2024 and sell it today you would earn a total of 1,722 from holding Caterpillar or generate 4.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caterpillar vs. Dalrada Financial Corp
Performance |
| Timeline |
| Caterpillar |
| Dalrada Financial Corp |
Caterpillar and Dalrada Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and Dalrada Financial
The main advantage of trading using opposite Caterpillar and Dalrada Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, Dalrada Financial 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 Dalrada Financial will offset losses from the drop in Dalrada Financial's long position.| Caterpillar vs. Lion Electric Corp | Caterpillar vs. Xos Inc | Caterpillar vs. Hydrofarm Holdings Group | Caterpillar vs. AGCO Corporation |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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