Correlation Between Caterpillar and Fandom Sports
Can any of the company-specific risk be diversified away by investing in both Caterpillar and Fandom Sports 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 Fandom Sports into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and Fandom Sports Media, you can compare the effects of market volatilities on Caterpillar and Fandom Sports 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 Fandom Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and Fandom Sports.
Diversification Opportunities for Caterpillar and Fandom Sports
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Caterpillar and Fandom is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and Fandom Sports Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fandom Sports Media 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 Fandom Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fandom Sports Media has no effect on the direction of Caterpillar i.e., Caterpillar and Fandom Sports go up and down completely randomly.
Pair Corralation between Caterpillar and Fandom Sports
Considering the 90-day investment horizon Caterpillar is expected to generate 197.27 times less return on investment than Fandom Sports. But when comparing it to its historical volatility, Caterpillar is 130.89 times less risky than Fandom Sports. It trades about 0.16 of its potential returns per unit of risk. Fandom Sports Media is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 0.22 in Fandom Sports Media on September 4, 2024 and sell it today you would earn a total of 0.18 from holding Fandom Sports Media or generate 81.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caterpillar vs. Fandom Sports Media
Performance |
| Timeline |
| Caterpillar |
| Fandom Sports Media |
Caterpillar and Fandom Sports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and Fandom Sports
The main advantage of trading using opposite Caterpillar and Fandom Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, Fandom Sports 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 Fandom Sports will offset losses from the drop in Fandom Sports' long position.| Caterpillar vs. AGCO Corporation | Caterpillar vs. Deere Company | Caterpillar vs. Lindsay | Caterpillar vs. Lion Electric Corp |
| Fandom Sports vs. 01 Communique Laboratory | Fandom Sports vs. LifeSpeak | Fandom Sports vs. RESAAS Services | Fandom Sports vs. RenoWorks Software |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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