Correlation Between Caterpillar and Innovator Capital
Can any of the company-specific risk be diversified away by investing in both Caterpillar and Innovator Capital 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 Innovator Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and Innovator Capital Management, you can compare the effects of market volatilities on Caterpillar and Innovator Capital 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 Innovator Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and Innovator Capital.
Diversification Opportunities for Caterpillar and Innovator Capital
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Caterpillar and Innovator is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and Innovator Capital Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator Capital 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 Innovator Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator Capital has no effect on the direction of Caterpillar i.e., Caterpillar and Innovator Capital go up and down completely randomly.
Pair Corralation between Caterpillar and Innovator Capital
If you would invest 20,806 in Caterpillar on January 16, 2025 and sell it today you would earn a total of 8,208 from holding Caterpillar or generate 39.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Caterpillar vs. Innovator Capital Management
Performance |
| Timeline |
| Caterpillar |
| Innovator Capital |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
Caterpillar and Innovator Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and Innovator Capital
The main advantage of trading using opposite Caterpillar and Innovator Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, Innovator Capital 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 Innovator Capital will offset losses from the drop in Innovator Capital's long position.The idea behind Caterpillar and Innovator Capital Management pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Innovator Capital vs. First Trust Exchange Traded | Innovator Capital vs. FT Cboe Vest | Innovator Capital vs. FT Cboe Vest |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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