Correlation Between Caterpillar and Mainstay Unconstrained
Can any of the company-specific risk be diversified away by investing in both Caterpillar and Mainstay Unconstrained 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 Mainstay Unconstrained into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and Mainstay Unconstrained Bond, you can compare the effects of market volatilities on Caterpillar and Mainstay Unconstrained 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 Mainstay Unconstrained. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and Mainstay Unconstrained.
Diversification Opportunities for Caterpillar and Mainstay Unconstrained
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Caterpillar and Mainstay is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and Mainstay Unconstrained Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Unconstrained 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 Mainstay Unconstrained. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Unconstrained has no effect on the direction of Caterpillar i.e., Caterpillar and Mainstay Unconstrained go up and down completely randomly.
Pair Corralation between Caterpillar and Mainstay Unconstrained
Considering the 90-day investment horizon Caterpillar is expected to generate 9.19 times more return on investment than Mainstay Unconstrained. However, Caterpillar is 9.19 times more volatile than Mainstay Unconstrained Bond. It trades about 0.08 of its potential returns per unit of risk. Mainstay Unconstrained Bond is currently generating about 0.08 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 1,504 from holding Caterpillar or generate 3.85% 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. Mainstay Unconstrained Bond
Performance |
| Timeline |
| Caterpillar |
| Mainstay Unconstrained |
Caterpillar and Mainstay Unconstrained Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and Mainstay Unconstrained
The main advantage of trading using opposite Caterpillar and Mainstay Unconstrained positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, Mainstay Unconstrained 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 Mainstay Unconstrained will offset losses from the drop in Mainstay Unconstrained's long position.| Caterpillar vs. Lion Electric Corp | Caterpillar vs. Xos Inc | Caterpillar vs. Hydrofarm Holdings Group | Caterpillar vs. AGCO Corporation |
| Mainstay Unconstrained vs. Mainstay High Yield | Mainstay Unconstrained vs. Mainstay Tax Free | Mainstay Unconstrained vs. Mainstay Income Builder | Mainstay Unconstrained vs. Mainstay 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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