Correlation Between Caterpillar and Mars Bancorp
Can any of the company-specific risk be diversified away by investing in both Caterpillar and Mars Bancorp 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 Mars Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and Mars Bancorp, you can compare the effects of market volatilities on Caterpillar and Mars Bancorp 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 Mars Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and Mars Bancorp.
Diversification Opportunities for Caterpillar and Mars Bancorp
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Caterpillar and Mars is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and Mars Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mars Bancorp 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 Mars Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mars Bancorp has no effect on the direction of Caterpillar i.e., Caterpillar and Mars Bancorp go up and down completely randomly.
Pair Corralation between Caterpillar and Mars Bancorp
If you would invest 37,620 in Caterpillar on September 1, 2024 and sell it today you would earn a total of 2,991 from holding Caterpillar or generate 7.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 4.76% |
| Values | Daily Returns |
Caterpillar vs. Mars Bancorp
Performance |
| Timeline |
| Caterpillar |
| Mars Bancorp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Caterpillar and Mars Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and Mars Bancorp
The main advantage of trading using opposite Caterpillar and Mars Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, Mars Bancorp 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 Mars Bancorp will offset losses from the drop in Mars Bancorp's long position.| Caterpillar vs. AGCO Corporation | Caterpillar vs. Nikola Corp | Caterpillar vs. PACCAR Inc | Caterpillar vs. Deere Company |
| Mars Bancorp vs. Potomac Bancshares | Mars Bancorp vs. Apollo Bancorp | Mars Bancorp vs. The Farmers Bank | Mars Bancorp vs. Community Bankers |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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