Correlation Between Caterpillar and Fidelity Large
Can any of the company-specific risk be diversified away by investing in both Caterpillar and Fidelity Large 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 Fidelity Large into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and Fidelity Large Cap, you can compare the effects of market volatilities on Caterpillar and Fidelity Large 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 Fidelity Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and Fidelity Large.
Diversification Opportunities for Caterpillar and Fidelity Large
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Caterpillar and Fidelity is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and Fidelity Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Large Cap 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 Fidelity Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Large Cap has no effect on the direction of Caterpillar i.e., Caterpillar and Fidelity Large go up and down completely randomly.
Pair Corralation between Caterpillar and Fidelity Large
If you would invest 32,883 in Caterpillar on September 1, 2024 and sell it today you would earn a total of 7,728 from holding Caterpillar or generate 23.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 0.79% |
| Values | Daily Returns |
Caterpillar vs. Fidelity Large Cap
Performance |
| Timeline |
| Caterpillar |
| Fidelity Large Cap |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Caterpillar and Fidelity Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and Fidelity Large
The main advantage of trading using opposite Caterpillar and Fidelity Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, Fidelity Large 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 Fidelity Large will offset losses from the drop in Fidelity Large's long position.| Caterpillar vs. AGCO Corporation | Caterpillar vs. Nikola Corp | Caterpillar vs. PACCAR Inc | Caterpillar vs. Deere Company |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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