Correlation Between Caterpillar and Social Leverage
Can any of the company-specific risk be diversified away by investing in both Caterpillar and Social Leverage 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 Social Leverage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and Social Leverage Acquisition, you can compare the effects of market volatilities on Caterpillar and Social Leverage 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 Social Leverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and Social Leverage.
Diversification Opportunities for Caterpillar and Social Leverage
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Caterpillar and Social is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and Social Leverage Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Social Leverage Acqu 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 Social Leverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Social Leverage Acqu has no effect on the direction of Caterpillar i.e., Caterpillar and Social Leverage go up and down completely randomly.
Pair Corralation between Caterpillar and Social Leverage
Considering the 90-day investment horizon Caterpillar is expected to generate 18.15 times less return on investment than Social Leverage. But when comparing it to its historical volatility, Caterpillar is 11.71 times less risky than Social Leverage. It trades about 0.08 of its potential returns per unit of risk. Social Leverage Acquisition is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 6.50 in Social Leverage Acquisition on August 30, 2024 and sell it today you would earn a total of 7.50 from holding Social Leverage Acquisition or generate 115.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 23.84% |
| Values | Daily Returns |
Caterpillar vs. Social Leverage Acquisition
Performance |
| Timeline |
| Caterpillar |
| Social Leverage Acqu |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Caterpillar and Social Leverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and Social Leverage
The main advantage of trading using opposite Caterpillar and Social Leverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, Social Leverage 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 Social Leverage will offset losses from the drop in Social Leverage's long position.| Caterpillar vs. AGCO Corporation | Caterpillar vs. Nikola Corp | Caterpillar vs. PACCAR Inc | Caterpillar vs. Deere Company |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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