Correlation Between Caterpillar and Red Branch
Can any of the company-specific risk be diversified away by investing in both Caterpillar and Red Branch 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 Red Branch into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and Red Branch Technologies, you can compare the effects of market volatilities on Caterpillar and Red Branch 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 Red Branch. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and Red Branch.
Diversification Opportunities for Caterpillar and Red Branch
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Caterpillar and Red is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and Red Branch Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Red Branch Technologies 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 Red Branch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Red Branch Technologies has no effect on the direction of Caterpillar i.e., Caterpillar and Red Branch go up and down completely randomly.
Pair Corralation between Caterpillar and Red Branch
If you would invest 36,604 in Caterpillar on October 21, 2024 and sell it today you would earn a total of 1,998 from holding Caterpillar or generate 5.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caterpillar vs. Red Branch Technologies
Performance |
| Timeline |
| Caterpillar |
| Red Branch Technologies |
Caterpillar and Red Branch Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and Red Branch
The main advantage of trading using opposite Caterpillar and Red Branch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, Red Branch 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 Red Branch will offset losses from the drop in Red Branch's long position.| Caterpillar vs. AGCO Corporation | Caterpillar vs. Nikola Corp | Caterpillar vs. PACCAR Inc | Caterpillar vs. Deere Company |
| Red Branch vs. HeartCore Enterprises | Red Branch vs. Trust Stamp | Red Branch vs. Quhuo | Red Branch vs. C3 Ai Inc |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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