Correlation Between Caterpillar and 1ST SUMMIT
Can any of the company-specific risk be diversified away by investing in both Caterpillar and 1ST SUMMIT 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 1ST SUMMIT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and 1ST SUMMIT BANCORP, you can compare the effects of market volatilities on Caterpillar and 1ST SUMMIT 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 1ST SUMMIT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and 1ST SUMMIT.
Diversification Opportunities for Caterpillar and 1ST SUMMIT
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Caterpillar and 1ST is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and 1ST SUMMIT BANCORP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 1ST SUMMIT BANCORP 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 1ST SUMMIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 1ST SUMMIT BANCORP has no effect on the direction of Caterpillar i.e., Caterpillar and 1ST SUMMIT go up and down completely randomly.
Pair Corralation between Caterpillar and 1ST SUMMIT
Considering the 90-day investment horizon Caterpillar is expected to under-perform the 1ST SUMMIT. But the stock apears to be less risky and, when comparing its historical volatility, Caterpillar is 1.23 times less risky than 1ST SUMMIT. The stock trades about -0.18 of its potential returns per unit of risk. The 1ST SUMMIT BANCORP is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest 2,757 in 1ST SUMMIT BANCORP on November 27, 2024 and sell it today you would lose (332.00) from holding 1ST SUMMIT BANCORP or give up 12.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caterpillar vs. 1ST SUMMIT BANCORP
Performance |
| Timeline |
| Caterpillar |
| 1ST SUMMIT BANCORP |
Caterpillar and 1ST SUMMIT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and 1ST SUMMIT
The main advantage of trading using opposite Caterpillar and 1ST SUMMIT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, 1ST SUMMIT 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 1ST SUMMIT will offset losses from the drop in 1ST SUMMIT's long position.| Caterpillar vs. Aquagold International | Caterpillar vs. Thrivent High Yield | Caterpillar vs. Morningstar Unconstrained Allocation | Caterpillar vs. Via Renewables |
| 1ST SUMMIT vs. Apollo Bancorp | 1ST SUMMIT vs. Oregon Pacific Bancorp | 1ST SUMMIT vs. The Farmers Bank | 1ST SUMMIT vs. Community Bankers |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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