Correlation Between Caterpillar and Pacer Funds
Can any of the company-specific risk be diversified away by investing in both Caterpillar and Pacer Funds 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 Pacer Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and Pacer Funds Trust, you can compare the effects of market volatilities on Caterpillar and Pacer Funds 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 Pacer Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and Pacer Funds.
Diversification Opportunities for Caterpillar and Pacer Funds
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Caterpillar and Pacer is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and Pacer Funds Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Funds Trust 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 Pacer Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Funds Trust has no effect on the direction of Caterpillar i.e., Caterpillar and Pacer Funds go up and down completely randomly.
Pair Corralation between Caterpillar and Pacer Funds
Considering the 90-day investment horizon Caterpillar is expected to under-perform the Pacer Funds. But the stock apears to be less risky and, when comparing its historical volatility, Caterpillar is 1.03 times less risky than Pacer Funds. The stock trades about -0.45 of its potential returns per unit of risk. The Pacer Funds Trust is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,112 in Pacer Funds Trust on November 28, 2024 and sell it today you would earn a total of 31.00 from holding Pacer Funds Trust or generate 1.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caterpillar vs. Pacer Funds Trust
Performance |
| Timeline |
| Caterpillar |
| Pacer Funds Trust |
Caterpillar and Pacer Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and Pacer Funds
The main advantage of trading using opposite Caterpillar and Pacer Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, Pacer Funds 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 Pacer Funds will offset losses from the drop in Pacer Funds' long position.| Caterpillar vs. Aquagold International | Caterpillar vs. Thrivent High Yield | Caterpillar vs. Morningstar Unconstrained Allocation | Caterpillar vs. Via Renewables |
| Pacer Funds vs. Strategy Shares | Pacer Funds vs. Freedom Day Dividend | Pacer Funds vs. Franklin Templeton ETF | Pacer Funds vs. iShares MSCI China |
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
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments |