Correlation Between Caterpillar and Rubicon Organics
Can any of the company-specific risk be diversified away by investing in both Caterpillar and Rubicon Organics 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 Rubicon Organics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and Rubicon Organics, you can compare the effects of market volatilities on Caterpillar and Rubicon Organics 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 Rubicon Organics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and Rubicon Organics.
Diversification Opportunities for Caterpillar and Rubicon Organics
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Caterpillar and Rubicon is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and Rubicon Organics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rubicon Organics 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 Rubicon Organics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rubicon Organics has no effect on the direction of Caterpillar i.e., Caterpillar and Rubicon Organics go up and down completely randomly.
Pair Corralation between Caterpillar and Rubicon Organics
Considering the 90-day investment horizon Caterpillar is expected to generate 0.39 times more return on investment than Rubicon Organics. However, Caterpillar is 2.55 times less risky than Rubicon Organics. It trades about 0.09 of its potential returns per unit of risk. Rubicon Organics is currently generating about -0.05 per unit of risk. If you would invest 38,751 in Caterpillar on August 30, 2024 and sell it today you would earn a total of 1,619 from holding Caterpillar or generate 4.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caterpillar vs. Rubicon Organics
Performance |
| Timeline |
| Caterpillar |
| Rubicon Organics |
Caterpillar and Rubicon Organics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and Rubicon Organics
The main advantage of trading using opposite Caterpillar and Rubicon Organics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, Rubicon Organics 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 Rubicon Organics will offset losses from the drop in Rubicon Organics' long position.| Caterpillar vs. AGCO Corporation | Caterpillar vs. Nikola Corp | Caterpillar vs. PACCAR Inc | Caterpillar vs. Deere Company |
| Rubicon Organics vs. Benchmark Botanics | Rubicon Organics vs. Speakeasy Cannabis Club | Rubicon Organics vs. City View Green | Rubicon Organics vs. BC Craft Supply |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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