Correlation Between Caterpillar and Eaton Vance
Can any of the company-specific risk be diversified away by investing in both Caterpillar and Eaton Vance 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 Eaton Vance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and Eaton Vance Tax Managed, you can compare the effects of market volatilities on Caterpillar and Eaton Vance 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 Eaton Vance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and Eaton Vance.
Diversification Opportunities for Caterpillar and Eaton Vance
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Caterpillar and Eaton is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and Eaton Vance Tax Managed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton Vance Tax 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 Eaton Vance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eaton Vance Tax has no effect on the direction of Caterpillar i.e., Caterpillar and Eaton Vance go up and down completely randomly.
Pair Corralation between Caterpillar and Eaton Vance
Considering the 90-day investment horizon Caterpillar is expected to generate 3.37 times more return on investment than Eaton Vance. However, Caterpillar is 3.37 times more volatile than Eaton Vance Tax Managed. It trades about 0.09 of its potential returns per unit of risk. Eaton Vance Tax Managed is currently generating about 0.0 per unit of risk. If you would invest 39,061 in Caterpillar on August 29, 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 Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caterpillar vs. Eaton Vance Tax Managed
Performance |
| Timeline |
| Caterpillar |
| Eaton Vance Tax |
Caterpillar and Eaton Vance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and Eaton Vance
The main advantage of trading using opposite Caterpillar and Eaton Vance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, Eaton Vance 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 Eaton Vance will offset losses from the drop in Eaton Vance's long position.| Caterpillar vs. Lion Electric Corp | Caterpillar vs. Xos Inc | Caterpillar vs. Hydrofarm Holdings Group | Caterpillar vs. AGCO Corporation |
| Eaton Vance vs. Eaton Vance Risk | Eaton Vance vs. Blackrock Muniholdings Closed | Eaton Vance vs. DTF Tax Free | Eaton Vance vs. Eaton Vance Floating |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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