Correlation Between Caterpillar and Series Portfolios
Can any of the company-specific risk be diversified away by investing in both Caterpillar and Series Portfolios 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 Series Portfolios into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and Series Portfolios Trust, you can compare the effects of market volatilities on Caterpillar and Series Portfolios 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 Series Portfolios. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and Series Portfolios.
Diversification Opportunities for Caterpillar and Series Portfolios
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Caterpillar and Series is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and Series Portfolios Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Series Portfolios Trust 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 Series Portfolios. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Series Portfolios Trust has no effect on the direction of Caterpillar i.e., Caterpillar and Series Portfolios go up and down completely randomly.
Pair Corralation between Caterpillar and Series Portfolios
Considering the 90-day investment horizon Caterpillar is expected to generate 1.28 times more return on investment than Series Portfolios. However, Caterpillar is 1.28 times more volatile than Series Portfolios Trust. It trades about 0.23 of its potential returns per unit of risk. Series Portfolios Trust is currently generating about 0.22 per unit of risk. If you would invest 36,539 in Caterpillar on October 23, 2024 and sell it today you would earn a total of 2,063 from holding Caterpillar or generate 5.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caterpillar vs. Series Portfolios Trust
Performance |
| Timeline |
| Caterpillar |
| Series Portfolios Trust |
Caterpillar and Series Portfolios Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and Series Portfolios
The main advantage of trading using opposite Caterpillar and Series Portfolios positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, Series Portfolios 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 Series Portfolios will offset losses from the drop in Series Portfolios' long position.| Caterpillar vs. AGCO Corporation | Caterpillar vs. Nikola Corp | Caterpillar vs. PACCAR Inc | Caterpillar vs. Deere Company |
| Series Portfolios vs. FundX Aggressive ETF | Series Portfolios vs. FT Vest Equity | Series Portfolios vs. Zillow Group Class | Series Portfolios vs. Northern Lights |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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