Correlation Between Caterpillar and Columbia Dividend
Can any of the company-specific risk be diversified away by investing in both Caterpillar and Columbia Dividend 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 Columbia Dividend into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and Columbia Dividend Income, you can compare the effects of market volatilities on Caterpillar and Columbia Dividend 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 Columbia Dividend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and Columbia Dividend.
Diversification Opportunities for Caterpillar and Columbia Dividend
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Caterpillar and Columbia is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and Columbia Dividend Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Dividend Income 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 Columbia Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Dividend Income has no effect on the direction of Caterpillar i.e., Caterpillar and Columbia Dividend go up and down completely randomly.
Pair Corralation between Caterpillar and Columbia Dividend
Considering the 90-day investment horizon Caterpillar is expected to generate 3.58 times more return on investment than Columbia Dividend. However, Caterpillar is 3.58 times more volatile than Columbia Dividend Income. It trades about 0.09 of its potential returns per unit of risk. Columbia Dividend Income is currently generating about 0.24 per unit of risk. If you would invest 39,061 in Caterpillar on August 29, 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. Columbia Dividend Income
Performance |
| Timeline |
| Caterpillar |
| Columbia Dividend Income |
Caterpillar and Columbia Dividend Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and Columbia Dividend
The main advantage of trading using opposite Caterpillar and Columbia Dividend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, Columbia Dividend 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 Columbia Dividend will offset losses from the drop in Columbia Dividend's long position.| Caterpillar vs. AGCO Corporation | Caterpillar vs. Nikola Corp | Caterpillar vs. PACCAR Inc | Caterpillar vs. Deere Company |
| Columbia Dividend vs. Transamerica Large Cap | Columbia Dividend vs. Qs Large Cap | Columbia Dividend vs. Fundamental Large Cap | Columbia Dividend vs. Tax Managed Large Cap |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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