Correlation Between Caterpillar and IShares Core
Can any of the company-specific risk be diversified away by investing in both Caterpillar and IShares Core 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 Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and iShares Core 10, you can compare the effects of market volatilities on Caterpillar and IShares Core 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 Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and IShares Core.
Diversification Opportunities for Caterpillar and IShares Core
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Caterpillar and IShares is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and iShares Core 10 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core 10 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 Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Core 10 has no effect on the direction of Caterpillar i.e., Caterpillar and IShares Core go up and down completely randomly.
Pair Corralation between Caterpillar and IShares Core
Considering the 90-day investment horizon Caterpillar is expected to generate 2.39 times more return on investment than IShares Core. However, Caterpillar is 2.39 times more volatile than iShares Core 10. It trades about 0.09 of its potential returns per unit of risk. iShares Core 10 is currently generating about 0.02 per unit of risk. If you would invest 25,586 in Caterpillar on November 5, 2024 and sell it today you would earn a total of 11,558 from holding Caterpillar or generate 45.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.65% |
| Values | Daily Returns |
Caterpillar vs. iShares Core 10
Performance |
| Timeline |
| Caterpillar |
| iShares Core 10 |
Caterpillar and IShares Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and IShares Core
The main advantage of trading using opposite Caterpillar and IShares Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, IShares Core 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 Core will offset losses from the drop in IShares Core's long position.| Caterpillar vs. AGCO Corporation | Caterpillar vs. Nikola Corp | Caterpillar vs. PACCAR Inc | Caterpillar vs. Deere Company |
| IShares Core vs. iShares Core 1 5 | IShares Core vs. iShares Agency Bond | IShares Core vs. iShares Intermediate GovernmentCredit | IShares Core vs. iShares GNMA Bond |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
Other Complementary Tools
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges |