Correlation Between Caterpillar and Return Stacked
Can any of the company-specific risk be diversified away by investing in both Caterpillar and Return Stacked 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 Return Stacked into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and Return Stacked Bonds, you can compare the effects of market volatilities on Caterpillar and Return Stacked 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 Return Stacked. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and Return Stacked.
Diversification Opportunities for Caterpillar and Return Stacked
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Caterpillar and Return is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and Return Stacked Bonds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Return Stacked Bonds 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 Return Stacked. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Return Stacked Bonds has no effect on the direction of Caterpillar i.e., Caterpillar and Return Stacked go up and down completely randomly.
Pair Corralation between Caterpillar and Return Stacked
Considering the 90-day investment horizon Caterpillar is expected to generate 3.08 times more return on investment than Return Stacked. However, Caterpillar is 3.08 times more volatile than Return Stacked Bonds. It trades about 0.07 of its potential returns per unit of risk. Return Stacked Bonds is currently generating about -0.17 per unit of risk. If you would invest 23,134 in Caterpillar on September 13, 2024 and sell it today you would earn a total of 15,705 from holding Caterpillar or generate 67.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 16.19% |
| Values | Daily Returns |
Caterpillar vs. Return Stacked Bonds
Performance |
| Timeline |
| Caterpillar |
| Return Stacked Bonds |
Caterpillar and Return Stacked Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and Return Stacked
The main advantage of trading using opposite Caterpillar and Return Stacked positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, Return Stacked 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 Return Stacked will offset losses from the drop in Return Stacked's long position.| Caterpillar vs. Aquagold International | Caterpillar vs. Thrivent High Yield | Caterpillar vs. Morningstar Unconstrained Allocation | Caterpillar vs. Via Renewables |
| Return Stacked vs. SPDR Bloomberg Barclays | Return Stacked vs. SPDR SSGA Fixed | Return Stacked vs. SPDR DoubleLine Short | Return Stacked vs. SPDR Portfolio Corporate |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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