Correlation Between Caterpillar and Amplify Cash
Can any of the company-specific risk be diversified away by investing in both Caterpillar and Amplify Cash 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 Amplify Cash into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and Amplify Cash Flow, you can compare the effects of market volatilities on Caterpillar and Amplify Cash 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 Amplify Cash. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and Amplify Cash.
Diversification Opportunities for Caterpillar and Amplify Cash
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Caterpillar and Amplify is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and Amplify Cash Flow in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amplify Cash Flow 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 Amplify Cash. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amplify Cash Flow has no effect on the direction of Caterpillar i.e., Caterpillar and Amplify Cash go up and down completely randomly.
Pair Corralation between Caterpillar and Amplify Cash
Considering the 90-day investment horizon Caterpillar is expected to generate 1.68 times more return on investment than Amplify Cash. However, Caterpillar is 1.68 times more volatile than Amplify Cash Flow. It trades about 0.1 of its potential returns per unit of risk. Amplify Cash Flow is currently generating about 0.07 per unit of risk. If you would invest 23,179 in Caterpillar on September 2, 2024 and sell it today you would earn a total of 17,432 from holding Caterpillar or generate 75.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 81.45% |
| Values | Daily Returns |
Caterpillar vs. Amplify Cash Flow
Performance |
| Timeline |
| Caterpillar |
| Amplify Cash Flow |
Caterpillar and Amplify Cash Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and Amplify Cash
The main advantage of trading using opposite Caterpillar and Amplify Cash positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, Amplify Cash 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 Amplify Cash will offset losses from the drop in Amplify Cash's long position.| Caterpillar vs. AGCO Corporation | Caterpillar vs. Nikola Corp | Caterpillar vs. PACCAR Inc | Caterpillar vs. Deere Company |
| Amplify Cash vs. Global X Dow | Amplify Cash vs. AdvisorShares STAR Global | Amplify Cash vs. Global X Funds | Amplify Cash vs. FT Vest Dow |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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