Correlation Between Caterpillar and Tidal Trust
Can any of the company-specific risk be diversified away by investing in both Caterpillar and Tidal Trust 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 Tidal Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and Tidal Trust II, you can compare the effects of market volatilities on Caterpillar and Tidal Trust 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 Tidal Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and Tidal Trust.
Diversification Opportunities for Caterpillar and Tidal Trust
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Caterpillar and Tidal is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and Tidal Trust II in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tidal Trust II 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 Tidal Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tidal Trust II has no effect on the direction of Caterpillar i.e., Caterpillar and Tidal Trust go up and down completely randomly.
Pair Corralation between Caterpillar and Tidal Trust
Considering the 90-day investment horizon Caterpillar is expected to generate 8.42 times more return on investment than Tidal Trust. However, Caterpillar is 8.42 times more volatile than Tidal Trust II. It trades about 0.07 of its potential returns per unit of risk. Tidal Trust II is currently generating about 0.09 per unit of risk. If you would invest 23,785 in Caterpillar on August 31, 2024 and sell it today you would earn a total of 16,826 from holding Caterpillar or generate 70.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caterpillar vs. Tidal Trust II
Performance |
| Timeline |
| Caterpillar |
| Tidal Trust II |
Caterpillar and Tidal Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and Tidal Trust
The main advantage of trading using opposite Caterpillar and Tidal Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, Tidal Trust 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 Tidal Trust will offset losses from the drop in Tidal Trust's long position.| Caterpillar vs. Deere Company | Caterpillar vs. Lindsay | Caterpillar vs. Alamo Group | Caterpillar vs. Manitowoc |
| Tidal Trust vs. USCF Midstream Energy | Tidal Trust vs. EA Series Trust | Tidal Trust vs. WisdomTree Floating Rate | Tidal Trust vs. Fairlead Tactical Sector |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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