Correlation Between Caterpillar and IShares Evolved
Can any of the company-specific risk be diversified away by investing in both Caterpillar and IShares Evolved 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 IShares Evolved into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and iShares Evolved Technology, you can compare the effects of market volatilities on Caterpillar and IShares Evolved 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 IShares Evolved. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and IShares Evolved.
Diversification Opportunities for Caterpillar and IShares Evolved
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Caterpillar and IShares is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and iShares Evolved Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Evolved Tech 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 IShares Evolved. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Evolved Tech has no effect on the direction of Caterpillar i.e., Caterpillar and IShares Evolved go up and down completely randomly.
Pair Corralation between Caterpillar and IShares Evolved
Considering the 90-day investment horizon Caterpillar is expected to generate 1.88 times more return on investment than IShares Evolved. However, Caterpillar is 1.88 times more volatile than iShares Evolved Technology. It trades about 0.09 of its potential returns per unit of risk. iShares Evolved Technology is currently generating about 0.11 per unit of risk. If you would invest 39,061 in Caterpillar on August 28, 2024 and sell it today you would earn a total of 1,722 from holding Caterpillar or generate 4.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caterpillar vs. iShares Evolved Technology
Performance |
| Timeline |
| Caterpillar |
| iShares Evolved Tech |
Caterpillar and IShares Evolved Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and IShares Evolved
The main advantage of trading using opposite Caterpillar and IShares Evolved positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, IShares Evolved 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 IShares Evolved will offset losses from the drop in IShares Evolved's long position.| Caterpillar vs. Lion Electric Corp | Caterpillar vs. Xos Inc | Caterpillar vs. Hydrofarm Holdings Group | Caterpillar vs. AGCO Corporation |
| IShares Evolved vs. Invesco DWA Utilities | IShares Evolved vs. Invesco Dynamic Large | IShares Evolved vs. Invesco Dynamic Large | IShares Evolved vs. HUMANA INC |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities |