Correlation Between Caterpillar and Salisbury Bancorp
Can any of the company-specific risk be diversified away by investing in both Caterpillar and Salisbury 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 Salisbury Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and Salisbury Bancorp, you can compare the effects of market volatilities on Caterpillar and Salisbury 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 Salisbury Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and Salisbury Bancorp.
Diversification Opportunities for Caterpillar and Salisbury Bancorp
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Caterpillar and Salisbury is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and Salisbury Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salisbury 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 Salisbury Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salisbury Bancorp has no effect on the direction of Caterpillar i.e., Caterpillar and Salisbury Bancorp go up and down completely randomly.
Pair Corralation between Caterpillar and Salisbury Bancorp
If you would invest 39,061 in Caterpillar on August 29, 2024 and sell it today you would earn a total of 1,722 from holding Caterpillar or generate 4.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 4.55% |
| Values | Daily Returns |
Caterpillar vs. Salisbury Bancorp
Performance |
| Timeline |
| Caterpillar |
| Salisbury Bancorp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Caterpillar and Salisbury Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and Salisbury Bancorp
The main advantage of trading using opposite Caterpillar and Salisbury Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, Salisbury 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 Salisbury Bancorp will offset losses from the drop in Salisbury Bancorp's long position.| Caterpillar vs. Lion Electric Corp | Caterpillar vs. Xos Inc | Caterpillar vs. Hydrofarm Holdings Group | Caterpillar vs. AGCO Corporation |
| Salisbury Bancorp vs. Home Federal Bancorp | Salisbury Bancorp vs. First Northwest Bancorp | Salisbury Bancorp vs. National Bank Holdings | Salisbury Bancorp vs. Community Bank System |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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