Correlation Between Caterpillar and Goliath Film
Can any of the company-specific risk be diversified away by investing in both Caterpillar and Goliath Film 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 Goliath Film into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and Goliath Film and, you can compare the effects of market volatilities on Caterpillar and Goliath Film 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 Goliath Film. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and Goliath Film.
Diversification Opportunities for Caterpillar and Goliath Film
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Caterpillar and Goliath is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and Goliath Film and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goliath Film 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 Goliath Film. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goliath Film has no effect on the direction of Caterpillar i.e., Caterpillar and Goliath Film go up and down completely randomly.
Pair Corralation between Caterpillar and Goliath Film
Considering the 90-day investment horizon Caterpillar is expected to generate 0.25 times more return on investment than Goliath Film. However, Caterpillar is 4.0 times less risky than Goliath Film. It trades about 0.1 of its potential returns per unit of risk. Goliath Film and is currently generating about 0.01 per unit of risk. 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 Against |
| Strength | Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Caterpillar vs. Goliath Film and
Performance |
| Timeline |
| Caterpillar |
| Goliath Film |
Caterpillar and Goliath Film Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and Goliath Film
The main advantage of trading using opposite Caterpillar and Goliath Film positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, Goliath Film 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 Goliath Film will offset losses from the drop in Goliath Film's long position.| Caterpillar vs. AGCO Corporation | Caterpillar vs. Nikola Corp | Caterpillar vs. PACCAR Inc | Caterpillar vs. Deere Company |
| Goliath Film vs. HUMANA INC | Goliath Film vs. Aquagold International | Goliath Film vs. Barloworld Ltd ADR | Goliath Film vs. Thrivent High Yield |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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