Correlation Between Caterpillar and Locorr Macro
Can any of the company-specific risk be diversified away by investing in both Caterpillar and Locorr Macro 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 Locorr Macro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and Locorr Macro Strategies, you can compare the effects of market volatilities on Caterpillar and Locorr Macro 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 Locorr Macro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and Locorr Macro.
Diversification Opportunities for Caterpillar and Locorr Macro
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Caterpillar and Locorr is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and Locorr Macro Strategies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Locorr Macro Strategies 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 Locorr Macro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Locorr Macro Strategies has no effect on the direction of Caterpillar i.e., Caterpillar and Locorr Macro go up and down completely randomly.
Pair Corralation between Caterpillar and Locorr Macro
Considering the 90-day investment horizon Caterpillar is expected to generate 6.35 times more return on investment than Locorr Macro. However, Caterpillar is 6.35 times more volatile than Locorr Macro Strategies. It trades about 0.09 of its potential returns per unit of risk. Locorr Macro Strategies is currently generating about 0.13 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 Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caterpillar vs. Locorr Macro Strategies
Performance |
| Timeline |
| Caterpillar |
| Locorr Macro Strategies |
Caterpillar and Locorr Macro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and Locorr Macro
The main advantage of trading using opposite Caterpillar and Locorr Macro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, Locorr Macro 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 Locorr Macro will offset losses from the drop in Locorr Macro's long position.| Caterpillar vs. Lion Electric Corp | Caterpillar vs. Xos Inc | Caterpillar vs. Hydrofarm Holdings Group | Caterpillar vs. AGCO Corporation |
| Locorr Macro vs. Locorr Spectrum Income | Locorr Macro vs. Locorr Spectrum Income | Locorr Macro vs. Locorr Spectrum Income | Locorr Macro vs. Locorr Longshort Modities |
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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