Correlation Between Caterpillar and Fidelity Sustainable
Can any of the company-specific risk be diversified away by investing in both Caterpillar and Fidelity Sustainable 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 Sustainable into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and Fidelity Sustainable Core, you can compare the effects of market volatilities on Caterpillar and Fidelity Sustainable 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 Sustainable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and Fidelity Sustainable.
Diversification Opportunities for Caterpillar and Fidelity Sustainable
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Caterpillar and Fidelity is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and Fidelity Sustainable Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Sustainable Core 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 Sustainable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Sustainable Core has no effect on the direction of Caterpillar i.e., Caterpillar and Fidelity Sustainable go up and down completely randomly.
Pair Corralation between Caterpillar and Fidelity Sustainable
Considering the 90-day investment horizon Caterpillar is expected to generate 4.25 times more return on investment than Fidelity Sustainable. However, Caterpillar is 4.25 times more volatile than Fidelity Sustainable Core. It trades about 0.05 of its potential returns per unit of risk. Fidelity Sustainable Core is currently generating about 0.03 per unit of risk. If you would invest 24,715 in Caterpillar on October 7, 2024 and sell it today you would earn a total of 11,664 from holding Caterpillar or generate 47.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caterpillar vs. Fidelity Sustainable Core
Performance |
| Timeline |
| Caterpillar |
| Fidelity Sustainable Core |
Caterpillar and Fidelity Sustainable Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and Fidelity Sustainable
The main advantage of trading using opposite Caterpillar and Fidelity Sustainable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, Fidelity Sustainable 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 Sustainable will offset losses from the drop in Fidelity Sustainable's long position.| Caterpillar vs. AGCO Corporation | Caterpillar vs. Nikola Corp | Caterpillar vs. PACCAR Inc | Caterpillar vs. Deere Company |
| Fidelity Sustainable vs. Fidelity Sustainable Low | Fidelity Sustainable vs. Fidelity Investment Grade | Fidelity Sustainable vs. Fidelity Investment Grade | Fidelity Sustainable vs. Fidelity Sustainable High |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
Other Complementary Tools
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges |